DOF plans to collect P456-B through new, revised taxes

The government plans to impose new and revised taxes to generate nearly P500 billion over the next three years, data from the Department of Finance (DOF) showed.

Based on the DOF list of revenue measures submitted to Congress, the government has proposed eight tax initiatives that, once approved, could potentially raise P455.9 billion from 2024 to 2026.

Taking the lead in terms of potential tax contribution is the planned excise tax on sweetened beverages and junk food. The DOF estimated that this proposal alone could raise more than half of the revenue target at P272.39 billion.

If passed into law this year, the sugar and junk food taxes are expected to generate P75.7 billion next year, with a further increase to P90.7 billion in 2025 and, ultimately P105.99 billion by 2026.

The DOF wants to implement a tax of P10 per 100 grams or P10 per 100 milliliters on "pre-packaged foods lacking nutritional value." This includes confectioneries, snacks, and desserts that surpass the health department’s thresholds for fat, salt, and sugar content.

Additionally, the government intends to raise the sweetened beverage tax to P12 per liter, regardless of the type of sweetener used.

On the other hand, the proposal to impose value-added tax (VAT) on digital services providers is expected to contribute about P90 billion over the course of three years. 

The projected collection amounts to around P16.9 billion in 2024, followed by P18.27 billion in the subsequent year, and P19.5 billion by 2026.

Once approved, foreign digital service providers such as Netflix will be required to register their businesses with the Philippine government to ensure that VAT is included in the retail cost to consumers in the country. 

Meanwhile, the estimated revenue from the planned excise tax on single-use plastics is P20.9 billion, while the tax on pre-mixed alcoholic beverages is projected to collect P1.23 billion.

According to the DOF's revenue projection, the single-use plastic tax is expected to generate P6.5 billion in 2024, P6.9 billion in 2025, and P7.4 billion in 2026. 

Similarly, the additional taxes on pre-mixed alcoholic drinks will amount to P365 million, P408 million, and P456 million per year until 2026.

The DOF is also pushing for the removal of the excise tax exemption on pickup trucks in order to generate P19.26 billion. Of that amount, P5.7 billion will be collected next year, P6.4 billion in 2025, and P7.1 billion in 2026.

Likewise, the DOF is proposing updates to the rates of motor vehicle user's charges as outlined in the Motor Vehicle Road User's Tax bill. This measure, which is expected to come into effect in 2025, is projected to generate P46.8 billion for two years.

Additionally, the DOF aims to implement a new fiscal regime for the mining sector, with the goal of generating P38.63 billion between 2024 and 2026.

Earlier this month, the House Ways and Means Committee approved a bill that establishes a fiscal regime for the mining industry. This regime will introduce a margin-based royalty and windfall profits tax on miners.

Lastly, the DOF has proposed the Passive Income and Financial Intermediary Taxation Act (PIFITA) to collect P3.53 billion from 2024 to 2025.

The objective of PIFITA is to simplify, make fairer, enhance efficiency, and increase competitiveness in the region for passive income and financial intermediary taxes.