The Department of Finance (DOF) said Wednesday it is recalibrating its tax proposals and would no longer impose new taxes in the face of inflationary headwinds.
“We will continue to pursue the tax proposals of the Department of Finance. But we will refine them. In fact, we’ve put in a lot of work in the last few days refining these proposals already,” Finance Secretary Ralph Recto said in a news briefing.
“We’re tweaking them because I think now that the inflationary environment is a bit high, sometimes you impose additional taxes, it’s inflationary as well. So, the fine-tuning will be on what is fairer, number one. What is easy to collect, number two. What is practical, that’s how we’re looking at it,” he said.
Recto said the revised tax proposals would be presented to Legislative Executive Development Advisory Council (LEDAC) “soon” and to the Senate next week.
Recto also said, “frankly speaking, there are no plans of imposing additional new taxes.”
He said the government also scrapped the plans to impose higher taxes on junk food and sweetened beverages.
“My understanding is that they did not pursue this anymore. And I’m not considering it. Like I said, that number one, inflation is high. When you impose taxes, that is also inflationary. So I don’t think that now is the time to impose,” he said.
The government targets an inflation rate of 2 percent to 4 percent in 2024 until 2028. Inflation averaged 6 percent in 2023, faster than 5.8 percent in 2022.
Recto said that high inflation is “most urgent concern for Filipinos and should be tamed and kept at bay.”
“Ensuring that prices of goods remain stable and affordable is crucial to further grow the economy. Consequently, enabling us to boost revenue collection,” he said.
The government expects the economy to grow between 6.5 percent and 7.5 percent this year.
Recognizing the current economic challenges, Recto said the government must not rely solely on imposing new or additional taxes.
“We must also concentrate on optimizing the BIR’s [Bureau of Internal Revenue] and the BOC’s [Bureau of Customs] performance through creativity, transparency and efficiency in tax and customs administration,’ Recto said.
“With this, I strongly urge the BIR and BOC to work together as a team in ensuring the ease of paying taxes and eliminating trade barriers that severely impact our supply chains,” he said.
The government targets to generate P4.3 trillion in revenues this year, with the BIR tasked to collect P3.05 trillion, and the Bureau of Customs, P1 trillion.
Meanwhile, Recto said the rising Philippine debt is not a cause of concern for the government.
“Today, at 60 percent, I’m not that much concerned about the national debt. It’s your ability to pay that is important. It’s not the size of the debt, but your ability to pay,” he said.
“Nominally, the debt looks high. It’s P14.5 trillion about 60 percent of GDP, which is very manageable,” he said.