The Department of Finance (DOF) is prioritizing improving tax collection efficiency to avoid the need for new taxes, Finance Secretary Ralph Recto said.
“Hopefully, there would be no trigger. We should try to collect what’s there. There are still leakages in the system, so collection efficiency is key. It may take time, but it’s a wiser approach than raising taxes right away,” Finance Secretary Ralph Recto said.
Recto said the best strategy is to grow the economy which naturally leads to higher tax collections. The government set a gross domestic product growth of 6.5 percent to 7.5 percent this year.
The Finance chief earlier said the DOF has no new tax proposals, but is recalibrating its existing priority tax measures to guarantee that these are fairer, easier to collect, and more practical while ensuring that these reforms will not translate to unnecessary burden to Filipino consumers and taxpayers.
The department focuses on pushing Package 4 of the Comprehensive Tax Reform Program (CTRP), which seeks to encourage growth in key financial markets by simplifying the tax structure on passive income and on certain instruments and other financial products.
Under Package 4, the interest income tax will be harmonized at 20 percent, while royalties will be maintained according to the existing tax code until 2027, subsequently harmonized and decreased to 15 percent in 2028.
The dividend income tax will remain unchanged until 2027, with a proposed harmonization of 10 percent in 2028.The stock transaction tax will gradually be reduced annually by 0.1 percent, from 0.6 percent to 0.1 percent by 2028.
The rates on policies of insurance upon property, fidelity bonds and other insurance policies will gradually be decreased annually by 1 percent, from 12.5 percent to 7.5 percent in 2028.Meanwhile, taxes on Philippine Charity Sweepstakes Office (PCSO) tickets prizes, and other winnings will have no changes.
Taxes on mortgages, pledges and deeds of trust would stay at current rates until 2027, after which they would be lowered to a 0.3 percent rate by 2028.
The proposed changes to taxes on passive income, financial intermediaries, financial transactions and excise tax on pick-up trucks are expected to yield P12.2 billion in revenues from the third quarter of 2024 to 2028, versus the P83 billion foregone revenue from the original version of the bill and the P19.3 billion revenue loss from the House version.