The Senate approved on Monday the proposed P30.57 billion budget of the Department of Finance (DOF) for 2023, with Finance Secretary Benjamin Diokno saying the appropriation augers well for the country’s robust financial condition.
During the hearing, Diokno said developing and upgrading the country’s digital payment system is a top priority of the government’s financial managers before engaging in the Central Bank Digital Currency (CBDC) program.
In his presentation before the Finance committee chaired by Sen. Juan Edgardo Angara, Diokno said their next year’s budget highlights the digitalization and modernization initiatives of the DOF.
The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) topped the DOF-attached agencies with the highest allocation of P2.2 billion and P1.5 billion, respectively, mostly earmarked for their information communications technology (ICT) program.
Diokno noted that the DOF’s approved budget for next year 14.34 percent, or P3.833 billion higher than the department’s P26.736 billion budget for 2022.
Of the P3.833 billion, P2.362 billion goes to the BoC.
The DOF presentation also showed that 78.1 percent or P17.9 billion was earmarked for operational expenditures. Of this amount, P9.59 billion will go to the BIR and P3.188 billion for the BoC. Customs Revenue Enhancement Program.
Senate Minority Leader Aquilino Pimentel III urged the BoC and the BIR to expand the database of taxpayers to obligate big businesses to pay their correct taxes.
Senator Raffy Tulfo, on the other hand, asked why tricycle drivers, vendors and sari-sari stores were being forced to issue receipts while big time syndicates like oil smugglers do not pay taxes.
He cited BIR’s proposal to tax pedicab drivers, vendors, sari-sari stores and vloggers and asked why the agency is targeting on small-scale entrepreneurs instead of big corporations like the oil companies.
In response, Internal Revenue Commissioner Lilia Guillermo denied that the BIR was targeting small time entrepreneurs. She said the basic principle of taxation is to be “just and fair,” and the agency’s focus is on all taxpayers.
According to Tulfo, he had noticed that if the BIR wanted to increase its tax collection, it goes after the “small-time” taxpayers.
This remark was echoed by Pimentel who said the BIR goes only after small-time taxpayers, the law-abiding citizens, and those in the database.
Guillermo maintained that they are finding solution to the problem of tax collection through digitalization automation.
Through these methods, she said the BIR can check if a taxpayer is paying the proper taxes.
Guillermo also appealed to the public to report to the BIR’s ‘e-complaint system’ in case small taxpayers encountered harassment from BIR personnel.
Diokno agreed to expand database to reduce the tax rate exacted from on small taxpayer.
In the same hearing, Angara inquired from Customs Commissioner Yogi Filemon Ruiz for updates on the Customs digitalization program.
“Sen. Robinhood Padilla asked me on the Customs’ digitalization program. I told him that I was still in Congress when the Single Window Program of the Bureau of Customs was raised. Unfortunately, until now, the program has yet to be completed. So, how far are we in that Single Window Program?” Angara asked.
Ruiz said digitalization program of the bureau was already 91 percent complete.
He said the bureau could not yet finish the digitalization due to a pending legal case filed before the Regional Trial Court.
Sen. Francis Tolentino also asked about the agency’s exploratory study in considering the CBDC) system in the Philippines..
Diokno said that based on the DOF’s completed studies on the matter, transitioning into CBDC “at this time, would not be worthwhile” since current digital payment systems such as Pesonet and Instapay are “working very well” and are found to be reliable for online payments in the country.
Padilla also questioned the DOF if it will collect taxes from the online sellers and suggested to the agency to set categories based on the income of small online entrepreneurs.
Diokno admitted that there was a proposal to tax online sellers based on the value added tax law and in fairness to the physical store sellers who have been paying their taxes to the government.
He also lamented that the Philippine government resorted to borrowings to sustain its operations and programs, and even to pay its outstanding debts.
Inquiring about the national government’s debt, Pimentel noted the Bureau of Treasury’s (BTr) report that the country must allocate P1.58 trillion for debt service, which includes payments for principal debt and interests, next year. Government revenues, on the other hand, are estimated to total to P3.6 trillion in 2023. According to National Treasurer Rosalina De Leon, each of the estimated 110 million
Filipinos would have to pay P118,000 to settle the country’s obligations
“Common sense tells us that we should at least attempt to live within our means. Best effort…Let’s not get overconfident with our borrowings that our grandchildren, our great-grandchildren, are buried in debts even before they are born,” Pimentel added.
A study by the Bangko Sentral ng Pilipinas (BSP) in 2021 to find out the feasibility of digital currency concluded that it is not yet “worthwhile” for the Philippines at the moment.
“Because we have a parallel system, ‘yung (the) PESONet and InstaPay, pagtuunan muna natin ‘yun (let’s focus on that first) before we go into CBDC. ‘Yun ang resulta ng pag-aaral (That was the result of the study),” Diokno said during the DOF budget hearing.
PESONet and InstaPay are electronic funds transfer services that allow account holders to transfer funds in Philippine peso to another account of other participating banks, e-money issuers or mobile money operators.
The twin systems are under the BSP’s National Retail Payment System that aims to increase e-payment transactions.