Finance Secretary Ralph G. Recto plans to push for approval of five pending tax measures in Congress to raise around P213 billion by the end of President Marcos' term.
Recto said the Department of Finance (DOF) has refined these priority tax measures to avoid unnecessary hardship for consumers and taxpayers.
Recto emphasized the need to review proposals to consider potential unintended consequences on inflation and economic growth.
The DOF's priority measures include VAT on Digital Service Providers, Excise Tax on Single-use Plastics, and Package 4 of the Comprehensive Tax Reform Program.
Additionally, the measures cover Rationalization of the Mining Fiscal Regime and Reform on the Motor Vehicle Users’ Charge.
The recalibrated tax measures are aimed to be fairer, easier to collect, and more practical, with the DOF targeting to pass all of them within the year.
DOF expects P213 B revenue from 'refined' tax reforms
From 2024 to 2028
At a glance
The Department of Finance (DOF) plans to push for approval of five pending tax measures in Congress within this year to raise around P213 billion by the end of President Marcos' term.
In the absence of new tax proposals, Finance Secretary Ralph G. Recto said the DOF will continue to push for the passage of five pending priority tax measures of the Marcos administration.
Recto referred to these proposals as "refined priority tax measures" of the DOF that will not lead to unnecessary hardship for Filipino consumers and taxpayers.
“In my first week as Secretary of Finance, we have worked to review all proposals and have reconsidered some key provisions,” Recto said in a statement on Friday, Jan. 26.
“This is in consideration of the economic situation, where some proposals might have unintended consequences in terms of inflation or in terms of possibly hindering growth in some sectors,” he added.
The DOF's priority measures cover the Value-added Tax (VAT) on Digital Service Providers (DSP), the Imposition of Excise Tax on Single-use Plastics (SUPs), and Package 4 of the Comprehensive Tax Reform Program (CTRP).
They also include the Rationalization of the Mining Fiscal Regime and the Reform on the Motor Vehicle Users’ Charge (MVUC).
According to the finance chief, the recalibrated tax measures, which the DOF aims to all pass within the year, are "fairer, easier to collect, and more practical.”
The VAT on DSP seeks to level the playing field between local and foreign DSPs by clarifying that services provided by the latter in the country are subject to VAT.
The DOF said the reform will lead to equitable tax treatment and fair competition between foreign and local DSPs and is expected to bring in a total of P83.8 billion in revenues from 2024 to 2028.
Meanwhile, Package 4 seeks to encourage growth in key financial markets by simplifying the tax structure on passive income, and on certain instruments and other financial products.
Recto said that under the refined Package 4 proposal, the DOF seeks to maintain the structure of some products and instruments while deferring the implementation of certain provisions by 2028 or when the government will have been in a better fiscal position.
The measure would bring in an estimated additional PHP 12.2 billion in revenues from 2024 to 2028.
The DOF also seeks to curb the high volume of mismanaged plastics by imposing an excise tax on certain SUPs. The measure is expected to generate a total of P33.9 billion in revenues from 2024 to 2028.
The rationalization of the Mining Fiscal Regime, on the other hand, aims to introduce a new fiscal regime that encourages growth in the sector while ensuring that the government still gets its fair share of the profits from mining activities.
The proposal will generate P47 billion in incremental revenues from 2024 to 2028.
Finally, the DOF has enhanced its MVUC proposal to consider the impact of the new rates on inflation, particularly in the transportation and logistics sectors. Given the revised MVUC, the reform will generate P36 billion from 2024 to 2028.
“Considering these reforms altogether, we expect total revenues to grow from 15.5 percent of GDP [gross domestic product] in 2024 to 16.8 percent of GDP in 2028,” Recto said.