Government eyes P500 billion revenues from additional taxes

MANILA, Philippines — The government targets to generate some P500-billion in fresh revenues starting 2025 through the imposition of additional tax measures over the medium-term.

During the Development Budget Coordination Committee (DBCC) briefing yesterday, the economic team increased its revenue projections over the new years of the Marcos administration.

Revenue projections in the medium term are expected to improve from P3.73 trillion this year to as much as P6.62 trillion in 2028.

This, as proposed tax revenue measures under the medium-term fiscal framework,  such as the Passive Income and Financial Intermediary Taxation Act, value added tax on digital service providers, and excise taxes on single-use plastics and pre-mixed alcohol, are expected to be implemented starting next year.

On top of that, Finance Secretary Benjamin Diokno said three additional tax reform measures, such as excise tax on sweetened beverages, motor vehicle road user’s tax, and the mining fiscal regime, are expected to contribute to state coffers.

Data released by the DOF showed that revenues from the three extra measures could yield some P501.4 billion.

The tax on sweetened beverages is not new as the Philippines in 2018 began slapping a P6 per liter tax on sweetened beverages as part of efforts to curb obesity in the country.

Diokno has yet to cite the specifics, but said the government plans to “increase it.”

DOF data shows that the government can generate P53.7 billion from an expanded levy on sweetened beverages during the first year of implementation by 2025.

This could increase to P67 billion by 2026 and further expand to P80.6 billion and P96.5 billion by 2027 and 2028. In total, anticipated revenues from the measure could reach P297.8 billion over a four-year period.

The tax reform package of the then Duterte administration included a P6 per liter tax on sweetened beverages made with caloric or non-caloric sweeteners.

It also included a P12 per liter tax on those made with high-fructose corn syrup. The two-tiered levy resulted in at least 13 percent to as much as 26 percent increase in the cost of beverages.

Another measure is on the motor vehicle road user’s tax which Diokno said would be adjusted.

DOF figures showed that the tax measure could generate P15.8 billion in revenues starting 2025 and nearly double to P31 billion the year after.

Some P48.6 billion can also be earned by 2027 and P55.6 billion by the end of the administration in 2028. In total, expected revenues in the medium-term could reach P151 billion.

The last measure is the mining fiscal regime that aims to achieve simplification, fair share, value-adding and good governance.

The new regime is expected to provide about P52.6 billion in additional revenues to the government from 2025 to 2028. This is higher than the earlier estimate of DOF at P40 billion.

Based on the original proposal of the DOF, the government wants to impose a royalty rate of five percent for all large-scale mining operations and provide incremental revenues of at least P5 billion yearly.

The DOF is also pushing for a rationalized and single fiscal regime applicable to all large-scale metallic mines, regardless of location.

In terms of value-adding, the DOF is proposing a 10-percent export tax on the gross value of mineral ore to encourage downstream and proper valuation of minerals. Currently, there is no duty on unprocessed export of minerals.

With the new tax measures, Diokno said revenues to be generated could actually be earned sooner.

“We are just being conservative. It depends on where it is in the legislative process,” Diokno said.

The Marcos administration has been urged to pursue fiscal consolidation through higher or additional taxes in order to generate revenue and address the budget deficit and ballooning debt of the country.