President Marcos’ chief economic manager stated that he expects an additional P300 billion to be injected into the government’s treasury over the next five years following the planned revision of existing passive income tax law.
Department of Finance (DOF) Secretary Ralph G. Recto, during an informal press chat over the weekend, told reporters that the government is increasing its revenues by amending existing tax measures.
One of which is the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA), which Recto expects to lead to revenue loss if it’s focused only on the harmonization of taxes.
“So we tweaked that [PIFITA] and we expect a revenue gain of up to P300 billion by 2030,” Recto said.
According to Recto, the administration plans to revise the proposed measure into the Government Revenues Optimization through the Wealth Tax Harmonization (GROWTH) bill, which could pump up revenues by 2030.
“That’s P300 billion for the next five years. So you could say that’s a new tax. But in my opinion, it won’t affect the masses. It’s not consumption-based, these are financial taxes,” he stressed.
Recto, likewise, plans to raise certain tax rates and eliminate some exemptions, including increasing the 20 percent withholding tax on passive income.
“There was a suggestion before to reduce that; I’m keeping it at 20 percent, but I’m taking away all the exemptions,” Recto said.
The tax on the Foreign Currency Deposit Unit (FDCU), currently at 15 percent, will increase to 20 percent under the proposed measure.
Meanwhile, the capital gains tax, estate tax, and donors’ tax, previously lowered to six percent, will increase by 10 percent, which Recto considers reasonable.
However, Recto noted that these proposed tax increases will have a sunset provision until 2030, after which they will return to six percent unless extended by Congress.