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USAID Facilitating Public Investment | Monthly Newsletter 1

GPH President Rodrigo Duterte

signs TRAIN Package 1 into law President Rodrigo Duterte signed into law

the Republic Act (R.A.) 10963 or the Tax Re-

form for Acceleration and Inclusion (TRAIN

Package 1) bill last December 19, 2017, the first

comprehensive tax policy reform in the Philip-

pines in 20 years. The TRAIN Law is expected

to generate P130 billion in revenues for the gov-

ernment. 60 percent of which will go to infra-

structure programs; 27% will be allocated to

social protection programs including the uncon-

ditional cash transfer to the 10 million poorest

Filipino families, health, nutrition, and anti-hunger

programs; and about 13% will be for military

modernization.

TRAIN Package 1, the first of a series of 5

tax packages, is expected to increase govern-

ment revenues by 0.7% of GDP in 2018, in-

creasing further to 1% in 2020, and finally by

0.8% in 2022. Moreover, TRAIN will reduce

the tax burden of over 90% of wage earners,

broaden the VAT base, adjust upward outdat-

ed tax rates on tobacco, oil products, mining

and coal, introduce taxes on diesel, sugar-

sweetened beverages, and cosmetic proce-

dures. Through TRAIN Package 1, relief

amounting to PhP 2,400 for the first year and

PhP 3,600 for the next 2 years, will be provid-

ed to about 10 million families that are antici-

pated to be affected by the temporary in-

crease in inflation.

The following table summarizes the

impact of TRAIN once it is implemented by

January 2018:

President Rodrigo Duterte signed into law the

Republic Act (R.A.) 10963 or the Tax Reform

for Acceleration and Inclusion (TRAIN Package

1), the first comprehensive tax policy reform in

the Philippines in 20 years.()

After the painstaking scoring and selection pro-

cess led by DAI/USAID FPI Project team, five (5)

civil society organizations were awarded

USAID’s Extractive Industries Transparency

Initiative Grant that is worth over US$270,000

out of 16 applications for RFA 004, entitled

“Strengthening Transparency and Accountability

in the Extractive Industries at the Subnational

Level.” The proposed projects will run from

December 1, 2017 to May 31, 2018 (Page 2)

Facilitating

Public

Investment Monthly Newsletter

December 2017

IN THIS ISSUE

President Rodrigo Roa Duterte leads the Ceremonial Signing of TRAIN Package 1 at the Malacañan Palace (Photo courtesy: Presidential

Communications Operations Office).

Summary of Impact (In billion PhP) 2018 2020 2022

Personal Income Tax – adjustment of brackets and rates

-138.2 -166.7 -201.2

Self-employed and Professionals – simplified regime

-11.5 -13.8 -16.7

VAT – expansion of base 37.2 58.2 45.9

Oil 55.2 120.2 124.4

Automobile 14.4 16.2 18.2

Sugar-sweetened Beverges 54.5 61.5 68.8

Mining and Coal 3.9 9.3 10.7

Tobacco 4.3 7.9 7.0

Other tax 62.5 73.0 96.9

Other non-tax 38.9 34.0 41.4

% to GDP 0.7% 1.0% 0.8%

USAID Facilitating Public Investment | Monthly Newsletter 2

The additional revenues generated by

TRAIN are critical to fulfilling an increase in in-

frastructure spending dubbed as the “Build, build,

build” program and in maintaining a sustainable

budget deficit level projected at -3.1% of GDP in

2018, -3.4% of GDP in 2020, and -3.4% of GDP

in 2022.

USAID-FPI provided holistic technical

assistance consisting of impact analyses of the

various proposals, communications support with

nation-wide roadshows, stakeholder surveys and

focus-group discussions, and provided timely

technical assistance to the Department of Fi-

nance’s SERG team led by Undersecretary Karl

Kendrick Chua.

Package 2 Corporate Income Tax and

Fiscal Incentive Rationalization

FPI’s assistance to the design and formu-

lation of the second tax reform package began in

mid-2017 in the DoF sponsored small-group

consultation attended by key government offi-

cials and experts from the academe, private sec-

tor, civil society, and the FPI team.

Package 2 promises to lower the corpo-

rate income tax rate to be more aligned with the

Philippines’ ASEAN peers, while expanding the

tax base by enacting rules that will make the

government more judicious in granting tax incen-

tives. Furthermore, Package 2 will also strength-

en the government’s ability to detect and deter

abuses coming from related party transactions.

Primary among this is to provide a working defi-

nition of related parties, for the purpose of im-

plementing the tax law.

Beginning in December 2017, FPI started

assisting the DoF with 3 key studies including a

cost-benefit analysis, estimates of leakage from

abusive related party transactions, and the tax

expenditure accounts estimation. The DoF plans

to submit the second reform package within the

first quarter of 2018. ###

Stakeholder Participation in Small Scale

Mining Governance in Benguet”

Project location: 13 municipalities of Ben-

guet Province

Grant amount awarded: USD 76,326 (Php

3,816,366)

3. Concerned Citizens of Abra for Good

Government (CCAGG) - Abra

Project Title: “Building-up for Transparency

and Accountability Initiatives on Mining in

Abra and Kalinga Provinces”

Project location: municipalities of Licuan-

Baay and Malibcong, province of Abra, and 3

IP communities (Banao tribe) of Balbalan,

province of Kalinga


2,715,513)

4. The Roman Catholic Bishop of

Kabankalan, Inc. – Negros Occidental

Project Title: “Augmenting Government’s

Environmental Protection Mandate for the

Extractive Industry in Southern Negros

Occidental”

Project location: Municipalities of Hinoba-an

and Cauayan, Cities of Sipalay and Kabanka-

lan in the province of Negros Occidental.


1,829,652)

5. Foundation for the Development of

Agusanons, Inc.(FDAI),

Project Title: “Caraga Mining Governance

Project: Empowering Local Stakeholders in

Managing Mineral Resources Of Agusan Del

Sur, Surigao del Norte and Surigao del Sur

Provinces”

Project location:

• Province of Agusan del Sur

• Municipal Government of Rosario,

Agusan del Sur

• Province of Surigao del Sur

• Municipal Government of Carrascal,

Surigao del Sur

• Province of Surigao del Norte

• Municipal Government of Claver, Suri-

gao del Norte


2,184,710)

The proposed projects will run from

December 1, 2017 to May 31, 2018. ###

USAID-FPI awards EITI Grants to CSOs

for subnational EITI implementation FPI also continues its work on the Extrac-

tive Industries Transparency Initiative, which is

also an Open Government Partnership commit-

ment of the GPH for its 2017-2019 National

Action Plan launched in August 2017. With the

theme “Strengthening Transparency and Ac-

countability in the Extractive Industries at the

Subnational Level,” FPI awarded five (5) civil

society organizations (CSOs) EITI Grants Fund

out of 16 grant applications.

Of the 16 grant applications that were

received and initially screened by the FPI Grants

Coordinator, only seven (7) received merit ap-

proval for evaluation by the Selection Commit-

tee of which six (6) met the minimum number of

points (60) and were included in the financial

review.

EITI's Grants Selection Committee for

RFA 004 which was convened on November 7,

2017 to evaluate and score the technical pro-

posals was composed of the following FPI pro-

ject personnel as members: Bruce Hutchins, Jem

Armovit, and Raelita Legaspi. The committee

evaluated the proposals based on the following

criteria:

•Minimum 3-year track record in undertak-

ing similar projects (20 points);

•Organizational capability to undertake the

tasks (20 points), with the following indica-

tors: project team composition and qualifi-

cations, and current reach of organizations

to network with IPs;

•Quality of proposal as demonstrated by

their understanding of the problem (10

points);

•Appropriateness of methodology to the

Scope of Work (15 points); and

•Feasibility of plan given timeframe and plan

to disseminate outputs (15 points)

After the painstaking scoring and selec-

tion process, FPI Finance and Operations Manag-

er, Remedios Dungca, and the FPI-EITI Grants

Coordinator, Carlos Tulali, conducted technical

and financial reviews as part of the pre-award

responsibility determination. Five CSO applicants

that were awarded EITI grants after the DAI/

FPI’s in-depth selection and review process:

1. BAN Toxics, Inc. - Southern Leyte

Project Title: “Project CLEAR (Creating

Local Engagements in ASGM communities

through Research and Capacity-Building)”

Proposed project location: municipalities of

Jose Panganiban, Labo and Paracale, prov-

ince of Camarines Norte; and Pinut-an, San

Ricardo, province of Southern Leyte


3,258,872)

2. Jaime V. Ongpin Foundation, Inc.: -

Benguet

Project Title: “Strengthening Multi-

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