Recto: Government no plans of imposing additional taxes

Finance Secretary Ralph Recto
Finance Secretary Ralph RectoPhoto from DOF

THE government has no plans of imposing additional taxes as the country recovers from the effects of the coronavirus disease (Covid-19) pandemic, said Finance Secretary Ralph Recto on Wednesday, January 24, 2024.

In a press conference, Recto said now is not the time to impose new taxes, noting the country’s high inflation environment. He said the government will instead focus on improving the tax collection efforts.

"Our first job is to collect what is on the table," he said.

Recto earlier said that the Department of Finance (DOF) has P4.3-trillion target revenue to be collected within the year.

The DOF secretary noted the need for the government to pursue tax reforms such as the Ease of Paying Taxes, intensification of implementation of digitalization initiatives, strengthen enforcement efforts, improve the administration of taxes and intensify its anti-corruption drive.

Recto said they are currently refining the tax measure pursued by his predecessor, former finance secretary Benjamin Diokno, including the Package 3 of the Comprehensive Tax Reform Program (CTRP), or the Real Property Valuation and Assessment Reform (RPVAR), Package 4 of the CTRP or the Passive Income and Financial Intermediaries Taxation Act (Pifita), as well as the rationalization of the mining fiscal regime and the Motor Vehicle Road User's Tax (MVRUT).

Diokno also proposed additional excise taxes on sweetened beverages and junk food, and single-use plastics (SUPs) but Recto said it was already scrapped even before he took office.

"I don't intend to put it back. The Executive did not prepare a bill anyway, I'm not considering it… inflation is high," Recto said.

MUP Pension

Meanwhile, Recto said he stands with the position of the Senate in terms of the military and uniformed personnel pension system reform, to require mandatory contributions only from new entrants to the service.

MUP refers to personnel from the Armed Forces of the Philippines (AFP), Bureau of Fire Protection, Bureau of Jail Management and Penology, Philippine Coast Guard, the Philippine Public Safety College, the Bureau of Corrections, and the Philippine National Police and commissioned officers of the hydrography branch of the National Mapping and Resource Information Authority who were transferred from the Bureau of Coast and Geodetic Survey.

“My personal stand is the same as the position now in the Senate. Number one, the government cannot be an Indian giver… the government has a social contract with our MUPs… we promised them a certain pension. I think the government should respect that, I think the Senate respects that,” he said.

“What we can do for the reform is that all new entrants, for example, on January 1, 2025, will have a different pension system similar to what civilians have. They will contribute now, let's say, to the GSIS (Government Service Insurance System),” he added.

Under Senate Bill 2501, new entrants in the military service will contribute seven percent of monthly base pay and longevity pay, with 14 percent from the government share, while new entrants from other uniformed agencies will pay nine percent of their monthly base pay and longevity pay with a 12 percent government share.

Diokno earlier proposed, though, that both active and new entrants should be contributing to the pension fund to prevent fiscal collapse.

At the House of Representative, House Bill 8969, or “An Act creating a sustainable framework for the pension system of the military and uniformed personnel, providing mechanisms for the disposition of government assets for the purpose, and appropriating funds therefor,” was approved in third and final reading in September.

Under the bill, the mandatory retirement age for MUP will be changed to 57 instead of 56 or upon accumulation of 30 years of active service, whichever comes later. They may also voluntarily retire after 20 years of service.

For key officers, retirement is upon completion of a tour of duty or upon relief by the President.

Their retirement pay is computed at 90 percent of their base pay plus longevity pay, regardless of years of service.

Monthly retirement pay of those who are already in active service before the enactment of the law shall be 50 percent of the base pay.

They will also receive longevity pay of the grade next higher to the salary grade they last held in case of 20 years of service, increasing by 2.5 percent for every year of service beyond 20 years to a maximum of 90 percent for 36 years of service and over.

For new entrants, or those who entered or re-entered the service after the enactment the proposed MUP pension law, retirement pay will be 50 percent of their base pay plus longevity pay in case of 20 years of service, increasing by 2.5 percent for every year of service beyond 20 years to a maximum of 90 percent for 36 years of service and over. (TPM/SunStar Philippines)

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