THERE is a need for the Philippines to preserve its existing tax systems in order to maintain fiscal discipline and carry out consolidation until 2028, an official said Tuesday, May 30, 2023.
But Finance Secretary Benjamin Diokno said in a press conference in Malacañang that reviewing the country’s tax system is continuous to improve what needs to be improved.
He said President Ferdinand "Bongbong" Marcos Jr. reiterated during a sectoral meeting earlier Tuesday that there is also the need to balance the system.
“Mayroon kasi tayong tinatawag na fiscal program na hanggang 2028, and right now, marami rin demands sa spending side, so kung mamimigay ng mga incentives ay mawawalan ka ng koleksyon, so we are studying it," Diokno said.
(Because we have what is called a fiscal program until 2028, and right now, there are also many demands on the spending side, so if incentives are given out, you will lose collection, so we are studying it.)
"It’s not a perfect system so we will look for improvements but right now, our revenue system is doing well, okay. So, sabi ko nga iyong namana namin kay Presidente Duterte na tax system is much, much better than the tax system that he inherited from the previous administration," he added.
Diokno said they are working with the International Monetary Fund (IMF) to address the low value-added tax (VAT) efficiency in the country, noting that while the Philippines has the highest VAT rate as compared to other countries, collection is the most inefficient at only 40 percent due to “too much” exemptions.
Prior to the passage of the reforms, the Philippine Tax Code contained many exemptions -- some 56 lines of exemptions and 84 additional exemptions in special laws, said Diokno.
He said from 2016 to 2020, the country collected an average of P723 billion from VAT, 40 percent of the expected VAT collections.
Citing a World Bank study, Diokno said the policy gap or the supposed tax to be collected and what is actually collected could reach as high as P539 billion.
“So, the various incentives and exemptions granted outside the Philippine Tax Code erode the revenue base and this requires the establishment of safeguards in tax administration to prevent abuse which further inflates the true cost of granting incentives,” said Diokno. (SunStar Philippines)
MANILA. Finance Secretary Benjamin Diokno. (Photo from Department of Finance Facebook page)
May 30, 2023
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