THE GOVERNMENT will only consider introducing new taxes if revenue collection falls short of target, the Department of Finance (DoF) said.
“It’s easy to pass a tax law. It’s easy to do a tabletop revenue estimate. What’s always harder is implementing the law and collecting the tax,” Finance Secretary Ralph G. Recto told reporters on the sidelines of a House Committee on Appropriations hearing late on Monday.
He said new taxes may be considered if revenue collections are not enough.
The National Government (NG) aims to collect P4.64 trillion in revenues next year, up 8.77% from this year’s projected P4.27-trillion collection. Of this, the government looks to collect P4.33 trillion in tax revenues, 13.41% lower than this year’s target.
“It’s a high target. Assuming there’s a shortfall in that, then we just manage the expenditures,” he added.
While Mr. Recto has repeatedly said there are no plans to introduce new taxes, the DoF has urged Congress to approve tax reforms that will generate as much as P28.38 billion in revenues next year.
Priority bills include the value-added tax on digital service providers, excise taxes on single-use plastics and pickup trucks, the rationalization of the mining fiscal regime, the motor vehicle road user’s charge, and the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy.
Filomeno S. Sta. Ana III, cofounder and coordinator at the Action for Economic Reforms, said that better tax administration is not enough to fund the government’s deficit.
“The challenge that the government faces is to unwind the deficit resulting from the heavy borrowing during the pandemic, and at the same time, it has to sustain high investments in social development, infrastructure, and green energy,” he said in a Viber message.
“In this context, careless and wasteful spending is a no-no, and the government is pressured to generate new revenues. Tax administration, with recent economic episodes as a guide, is insufficient,” he said in a Viber message.
For 2025, the NG set a deficit ceiling of P1.54 trillion or equivalent to 5.3% of gross domestic product.
BORROWINGS
Meanwhile, Mr. Recto said the borrowing mix for 2025 was raised in favor of domestic sources to minimize foreign exchange risk.
Next year’s borrowing program is set at P2.55 trillion, 0.97% lower than P2.57 trillion this year. Broken down, 80% will come from domestic sources with the remaining 20% from external sources. The government previously adopted a 75-25 borrowing mix.
Mr. Recto said the department is also aiming to secure its borrowings at the “lowest possible cost” and will opt for longer-term tenors, depending on the rates.
“Domestic borrowing can also be a sign of confidence in the local economy and may stimulate growth if the funds are used for productive investments that improve infrastructure and public services,” Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said in a Viber chat.
Mr. Recto said this won’t likely weaken output and consumption, with interest rates expected to go down. — Beatriz Marie D. Cruz