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DOF chief: No new taxes this year

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Finance Secretary Ralph Recto cites the importance of hitting the P4.3 trillion revenue target for 2024 in a briefing at the Bureau of Customs in Manila on Wednesday.* DOF photo

The government will not rely on the imposition of new taxes to meet its revenue target for this year and will instead focus on improving the collection efficiency of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), Department of Finance (DOF) Secretary Ralph Recto said.

In a briefing at the BOC office in Manila yesterday, Recto acknowledged that generating the P4.3 trillion revenue target for this year “is not a walk in the park.”

The bulk of the tax revenues amounting to P3.05 trillion will be generated by the BIR, while the BOC is expected to collect close to P1 trillion.

Almost P300 billion, meanwhile, will come from the Bureau of the Treasury, Recto said.

“Recognizing the current economic challenges, we must not rely solely on imposing new or additional taxes,” he said.

“As to imposing new taxes, frankly speaking, there are no plans of imposing additional new taxes. I think our first job is to collect what is on the table and that’s why we are planning with the BIR and the Customs Commissioner to improve its efficiency. How do we collect more from the current taxes imposed in the tax code,” he added.

Recto said that while he supports some of the tax reforms earlier proposed by former Finance Secretary Benjamin Diokno, the DOF is currently “refining” some of these proposals.

He said some of these need to be tweaked as the inflationary environment remains a bit high and imposing additional taxes will be inflationary.

Recto said one of these is the road users tax bill which seeks to provide adequate funding for the maintenance of national and provincial roads, as well as address air pollution from motor vehicles.

“We’re tempering that proposal. Because I think that, you know, motorists pay a lot of taxes. There are excise taxes and VAT (value-added tax) on oil. There are excise taxes, duties, and VAT on vehicles,” he said.

“Today, 50 percent or thereabouts of vehicles are unregistered. And if you impose higher taxes, maybe more vehicles will not register. So, I think we have to temper some of these increases because like I said, they’re also inflationary. And, it’s all about timing as well,” Recto added.

He said the refined proposals will be presented to the Legislative Executive Development Advisory Council on Thursday and will be submitted to the Senate next week.

Recto revealed that the earlier proposal to tax sweetened beverages and junk foods was already scrapped by the DOF.

IMPROVING TAX COLLECTION

To attain the revenue target, Recto ordered the BIR and the BOC to collaborate closely in ensuring the ease of paying taxes and eliminating trade barriers that severely impact the country’s supply chains.

In particular, Recto directed the BIR to swiftly implement the Ease of Paying Taxes Act to deliver on its promise of prompt, efficient and excellent taxpayer service, ensuring that taxpayers receive value for their contributions.

He also instructed the bureau to run after tax cheats and intensify its campaign for tax compliance in a fair manner that favors no one.

Recto directed the BOC to channel all efforts towards significantly enhancing trade facilitation and strengthening border control to curb smuggling.

In this regard, Recto announced that the DOF is working with the Office of the Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go to implement an integrated system for pre-border verification and invoicing to reduce smuggling and misdeclarations.

Recto also encouraged the bureaus to accelerate their digitization initiatives.

MANAGEABLE DEBT

During the briefing, Recto assured the public that the country’s debt level remains manageable.

“Today, I’m not that much concerned about the national debt. It’s not the size of the debt, but your ability to pay. Nominally, the debt looks high. It’s PHP14.5 trillion, roughly 60 percent of gross domestic product (GDP) which is very manageable,” he said.

Recto assured the public that the government is on track to reduce the debt-to-GDP to 51 percent by 2028.

“There are two ways of doing that. Raising taxes or a combination and growing the economy. So, to me, I think you can raise more revenue by growing the economy faster. When you grow the economy, you broaden the tax base and you collect more taxes. So, that’s the general perspective, that’s the general plan,” he said.*PNA

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