Instead of enacting a tax holiday or reducing the 12-percent value-added tax (VAT), the government should focus on ramping up the enforcement of existing tax measures to achieve the medium-term fiscal program (MTFP), the national socioeconomic planner asserted.

“What we want to avoid are any measures that erode our revenues,” Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan told reporters on the sidelines of the European Chamber of Commerce of the Philippines’ (ECCP) European-Philippine Business Dialogue (EPDB) on Thursday, Oct. 16.

“In fact, what we should do is strengthen and improve the enforcement and implementation of our tax measures to ensure that we’ll achieve this medium-term fiscal framework (MTFF),” Balisacan said.

While he urged enhanced enforcement, Balisacan said the government is performing “well” on this front. He said the Marcos Jr. administration is prioritizing the full digitalization of tax collection and administration to reduce face-to-face interactions between taxpayers and revenue officers.

He added that the goal is to make paying taxes simpler and remote, allowing people to transact from their homes or offices instead of going to the bureaus of Internal Revenue (BIR) or of Customs (BOC). “We are making a big push on the digitalization of our processes.”

Balisacan further emphasized that the government’s major thrust is ensuring the goals outlined in the MTFP are achieved, including the decline in debt and budget deficit as a proportion of gross domestic product (GDP).

“That is what not only the credit rating agencies, but also domestic and foreign investors are watching. Deficits, debt, and fiscal sustainability are closely tied to macroeconomic indicators like interest rates and so on,” Balisacan said.

As of end-August, the national government’s fiscal deficit widened by 24.7 percent to ₱869.2 billion from ₱697 billion in the same period last year, driven by a faster increase in spending than earnings.

According to the Bureau of the Treasury (BTr), the year-to-date fiscal deficit remains manageable, clocking in “well within” the ₱1.56-trillion revised full-year program for this year. It also accounted for only 55.7 percent of the target.

In particular, the government is targeting to bring the deficit to 5.5 percent of GDP this year from 5.7 percent last year. It is projected to narrow further to 5.3 percent in 2026, 4.8 percent in 2027, 4.3 percent in 2028, 3.7 percent in 2029, and 3.1 percent in 2030.

Meanwhile, the government’s outstanding debt shrank to ₱17.47 trillion in August from a record high of ₱17.56 trillion in July, due to the settlement of over half a trillion pesos in local bonds and a stronger peso.

Finance Secretary Ralph G. Recto and National Treasurer Sharon P. Almanza earlier expressed confidence in hitting the end-2025 debt target of ₱17.36 trillion.

Based on the Budget of Expenditures and Sources of Financing (BESF) for Fiscal Year (FY) 2026, the national government’s debt level is seen breaching ₱19 trillion by the end of 2026, nearly 10-percent higher than the projected end-2025 level of ₱17.36 trillion.

Last week, Senator Erwin Tulfo filed Senate Bill (SB) No. 1446, or the proposed One-Month Tax Holiday of 2025, which aims to give a one-month financial relief to Filipino workers amid the controversy over flood control projects.

Last month, Batangas 1st District Representative Leandro Leviste filed House Bill (HB) No. 4302, or the VAT Reduction Act of 2025, seeking to lower the VAT rate on goods and services to 10 percent from 12 percent.

Separately, Cavite 4th District Representative Francisco “Kiko” Barzaga filed HB 5119 last week, which seeks to outright scrap the existing VAT rate.