ASSERTING the Department of Finance’s (DOF) plan to not push for new taxes this year, the government’s top official in formulating sound fiscal policies said revenue collection efficiency must be prioritized.
Finance Secretary Ralph G. Recto told reporters on Thursday evening that he is hopeful there will be no triggers to introduce new taxes until 2025.
“Hopefully, there will be no trigger. Collection efficiency muna [first],” Recto said on the sidelines of the induction of the 2024 officers of the Economic Journalists Association of the Philippines (EJAP).
“But that will take time. You have to digitize, digitalization, [and] so on and so forth. I think it is prudent for us to say that let’s try to improve tax collection efficiency. Unless you want it to be higher than what you want,” Recto said in English and Filipino.
Earlier, Recto said digitalization would remain a priority of the DOF in improving revenue generation to safeguard integrity in operations and achieve modern and effective governance
As the electronic commerce (e-commerce) industry grows, the Finance Secretary said it becomes a challenge since it is harder to collect taxes in the digital industry.
Online sellers are now required by the Bureau of Internal Revenue (BIR) to pay 1-percent withholding taxes which will be remitted by e-marketplace operators and Digital Financial Service Providers (DFSPs) for the goods or services sold/paid through their platform/facility.
The DOF chief said that the tax effort will always be a gauge for him, adding that it doesn’t mean if he raises taxes, the tax effort will also increase.
“So to me, the best way to grow your revenue is to grow the economy,” Recto said. Despite the decrease in tax effort, he forwarded the belief that as the economy grows, tax collection will also improve.
When asked the time for government to impose new taxes, Recto said, “Ako, tingin ko, mataas na yung buwis [For me, I think the taxes are already high].”
“Sixty percent of our revenue already is indirect tax; and it is the most efficient way to collect—indirect tax,” he added. “If you impose too much taxes, you’ll have smuggling [and] illicit trade.”
On removing tax exemptions such as exempting cooperatives, Recto said the government should not give away more taxes.
Recto said he would prioritize first the monitoring of the revenue base, making sure it will stay intact to protect whatever the government has.
Following Recto’s appointment as the new Finance chief on January 15, he said the DOF, along with the BIR and Bureau of Customs (BOC) is banking on a more efficient and streamlined tax system to reach the state’s goal of collecting a record-high P4.3 trillion in revenues in 2023. (See: https://businessmirror.com.ph/2024/01/25/dof-not-rushing-new-taxes-amid-p4-3-trillion-goal/)
“Recognizing the current economic challenges, we must not rely solely on imposing new or additional taxes,” Recto said during his first press briefing as Finance secretary.
This year, the BIR is tasked to collect about P3.05 trillion in revenues while the BOC aims for P1 trillion in earnings.