Recto to prioritize pending tax reforms

As new finance chief

MANILA, Philippines — Newly appointed Finance Secretary Ralph Recto has committed to focusing on tax measures deemed a priority by President Marcos.

After taking his oath, Recto outlined his strategies for achieving inclusive economic growth that will benefit every Filipino.

Recognizing the country’s limited fiscal space due to the pandemic, Recto said he would advocate for the immediate passage of key tax reforms endorsed by the President as priority measures to Congress.

“I agree that we need funds to finance growth and our people’s growing needs, and install a system that promotes fair and fast tax administration,” Recto said.

“These measures will not only finance development but will reduce the deficit and our dependence on debt,” he said.

For Albay Rep. Joey Salceda, the new finance chief should give utmost priority to three of the “most urgent” tax policy objectives to reform the country’s tax system.

He said the country is in an “awkward position of being among the first to propose a digital services value-added tax (VAT).

Bu despite this, he underscored the Philippines is the last in ASEAN-6 to actually pass such a tax and this must be addressed soon.

Salceda also noted the second priority should be electronic commerce which is now the “driving force of consumer demand.”

“And that space escapes the reach of taxation easily. We need to work on reforms such as reconsidering the de minimis threshold for imports, requiring e-commerce platforms to ensure the tax compliance of their sellers, and creating mechanisms for cash-on-delivery transactions,” he said.

The lawmaker also said tobacco excise tax collections could collapse anew by as much as P45 billion this year due to substitution effects toward vaping. He said the government has to figure out how to address this declining revenue stream.

“Then we can work on more structural policy reforms. Secretary Recto was an advocate in the past of using MVUC revenue to finance public transport,” he said, referring to the Moro Vehicle User’s Charge.

As he takes on the finance portfolio, Recto will face a running budget deficit of P1.11 trillion and an outstanding debt of P14.5 trillion.

Recto has yet to provide his specific plans but for now, he committed to boosting the country’s economic resiliency by practicing fiscal discipline and prudent debt management.

The new finance chief emphasized the development of a Philippine medium-term debt management strategy for transparent public borrowings.

“This is the debt meter that will inform us on how to secure a future that leads to a stable fiscal position,” Recto said.

Further, the veteran lawmaker noted that the recently enacted Ease of Paying Taxes Act would be a valuable addition to the nation’s fiscal toolkit, providing significant benefits for both taxpayers and tax authorities.

Recto said he would push for the passage of the Capital Markets Development Act and pursue reforms in public and private pensions, prioritizing the best interests of beneficiaries while ensuring actuarial health and fund sustainability.

Addressing Marcos’ orders to expedite the country’s road to inclusive growth, Recto maintained the need to fortify the strong economic fundamentals established by his predecessors.

On inflation, Recto vowed to employ measures to shield consumers, especially the vulnerable, from the impact of elevated prices.

Having been a legislator for many years, Recto pursued tax measures and economic reforms meant to address the cost of living, generate employment, and expand the country’s fiscal space.

Among the major laws he principally authored and sponsored were the Tax Reform for Acceleration and Inclusion Act, Universal Healthcare Act, Rice Tariffication Act, Ease of Doing Business and Efficient Government Service Delivery Act, General Tax Amnesty, Rationalization of Excise Tax on Automobiles, and the Social Reform and Poverty Alleviation Act.

During the pandemic, Recto co-authored the Bayanihan to Recover as One Act and the Bayanihan to Heal as One Act, as well as initiated budget priorities. — Sheila Crisostomo