Recto: 'Revised' revenue measures to bring tax-GDP ratio to 16.8% in 2028

Finance Secretary Ralph Recto

Secretary Ralph Recto will be pushing for the passage of refined priority tax measures prepared by the Department of Finance (DOF).

In a statement on Friday, Recto said all of the tax measures combined are seen to have significant contributions to the economy this year until the end of the Marcos administration in 2028.

“Considering these reforms altogether, we expect total revenues to grow from 15.5% of GDP in 2024 to 16.8% of GDP in 2028,” the Finance chief said.

Recto said the DOF aims to pass all its priority reforms within the year to achieve the government’s fiscal targets as outlined in the Medium Term Fiscal Framework (MTFF).

“In my first week as Secretary of Finance, we have worked to review all proposals and have reconsidered some key provisions. This is in consideration of the economic situation, where some proposals might have unintended consequences in terms of inflation or in terms of possibly hindering growth in some sectors,” Recto said.

Among the DOF’s priority measures are the Value-added Tax (VAT) on Digital Service Providers (DSP); the Imposition of Excise Tax on Single-use Plastics (SUPs); Package 4 of the Comprehensive Tax Reform Program (CTRP); the Rationalization of the Mining Fiscal Regime; and the Reform on the Motor Vehicle Users’ Charge (MVUC).

The VAT on DSP seeks to level the playing field between local and foreign DSPs by clarifying that services provided by the latter in the country are subject to VAT.

The reform will lead to equitable tax treatment and fair competition between foreign and local DSPs and is expected to bring in a total of P83.8 billion in revenues from 2024 to 2028, according to the DOF.

Meanwhile, Package 4 seeks to encourage growth in key financial markets by simplifying the tax structure on passive income and on certain instruments and other financial products.

Recto said that under the refined Package 4 proposal, the DOF seeks to maintain the structure of some products and instruments while deferring the implementation of certain provisions by 2028 or when the government will have been in a better fiscal position.

This measure would bring in an estimated additional P12.2 billion in revenues from 2024 to 2028.

The DOF also seeks to curb the high volume of mismanaged plastics by imposing an excise tax on certain SUPs. The measure is expected to generate a total of P33.9 billion in revenues from 2024 to 2028.

The rationalization of the Mining Fiscal Regime, on the other hand, aims to introduce a new fiscal regime that encourages growth in the sector while ensuring that the government still gets its fair share of the profits from mining activities.

The proposal will generate P47 billion in incremental revenues from 2024 to 2028.

The DOF has enhanced its MVUC proposal to consider the impact of the new rates on inflation, particularly in the transportation and logistics sectors.

Given the revised MVUC, the reform will generate P36.0 billion from 2024 to 2028, according to the DOF. — VBL, GMA Integrated News

This article Recto: ‘Revised’ revenue measures to bring tax-GDP ratio to 16.8% in 2028 was originally published in GMA News Online.