DOF: Gov't stands to collect up to ₱29.5B per year in additional revenues from more taxes

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Metro Manila (CNN Philippines, May 29) — The government stands to rake in up to ₱29.5 billion in fresh annual revenues beginning 2024 — on top of its programmed revenues — once Congress approves a tax package that counts a levy on digital sales, single-use plastics, and pre-mixed alcohol, the Department of Finance (DOF) has said.

Finance Secretary Benjamin Diokno over the weekend trumpeted again the government’s fiscal consolidation plan in the wake of Fitch Ratings’ revision of its outlook on Philippine sovereign debt ratings from negative to stable.

The fiscal package, announced earlier at the last interagency Development Budget Coordination Committee (DBCC) meeting, includes Package 4 or the Passive lncome and Financial lntermediary Taxation Act, value-added tax (VAT) on digital service providers, and excise taxes on single-use plastics and pre-mixed alcohol.

The House of Representatives and the Senate are still tackling the proposed measures, but economic managers want them implemented beginning next year.

Package 4 is projected to bring in ₱8.5 billion in additional tax take in 2024, before gradually shrinking to ₱0.7 billion by 2028.

Excise taxes from digital service providers alone could boost state coffers up to ₱18.2 billion per year, DOF documents showed.

Taxing single-use plastics and pre-mixed alcohol, meanwhile, could generate up to ₱9 billion and ₱0.6 billion per year, DOF documents also showed.

Together, the tax take from these four measures combined would account for 0.1% of gross domestic product.

The Marcos administration wants to narrow the budget deficit, as a percentage of GDP, to 3% by 2028 when Marcos ends his term.

Earlier tax reform packages—the TRAIN law, sin taxes, and the Corporate Recovery and Tax Incentives for Enterprises—generated additional revenues of P202.8 billion in 2022, Diokno said in a separate statement distributed to journalists on May 26.

The total collection last year was 26.3%, or ₱42.3 billion higher than the 2021 full-year incremental revenue of ₱160.5 billion on the back of full economic recovery due to the lifting of stringent quarantine measures.

“The major gains in 2022 were seen in the imported petroleum excise tax, sweetened beverage excise tax, documentary stamp tax, and sin taxes on tobacco and alcohol,” read the statement.

Meanwhile, from 2025, the DOF wants to impose higher excise taxes on sweetened beverages, rationalize the Motor Vehicle Road User's Tax, as well as implement reforms to the mining fiscal regime.

Together, these additional higher taxes will beef up revenues by ₱501.25 billion from 2025 to 2028, collectively.