‘No new taxes likely until 2028’

MANILA, Philippines — The stance of Finance Secretary Ralph Recto against new taxes could extend until the end of the administration as the government will try to focus on improving tax collection efficiency first.

Recto is hoping that there will be no triggers that would force the Department of Finance to propose new tax measures.

“There is a possibility (of no new taxes under this administration). I think we should try first to collect what’s there. There are still so many (tax) leakages,” Recto told reporters.

“I think it is incumbent upon this administration that any increase in taxes is the last resort,” he said.

Upon his appointment in January, Recto already said that he is not inclined to impose additional taxes, especially consumption-based ones, so as not to add to Filipinos’ burden.

At the time, Recto said such a stance could last until next year. This time, he has expressed willingness to extend this until the end of the Marcos administration in 2028.

Recto has expressed his desire to run in the 2028 general elections, either for a Senate seat again or as governor of Batangas.

Asked whether his position against new taxes is connected to his political plans for 2028, Recto said “it has nothing to do with that.”

As a legislator during the Arroyo administration, Recto had pushed for the Expanded Value-Added Tax Law, which raised the VAT to 12 percent from 10 percent and covered additional goods.

While the measure was seen to have prevented the Philippines from slipping into a financial crisis, it also cost Recto his Senate seat in 2007.

The finance chief argued that tax efforts are always a gauge for new measures, but raising taxes does not always guarantee improved tax collections.

“To me, the best way to grow your revenue is to grow the economy. If you grow the economy, you will be able to collect more taxes,” Recto said.

Further, Recto noted that current tax rates are already high, saying that he can no longer tax oil, power, vehicles and tobacco as doing so could just increase smuggling and illicit trade.

He also dismissed the idea of a luxury tax and wealth tax, as well as the removal of some exemptions under the value-added tax system, specifically for senior citizens and for some medical products.

The Philippines has a long list of VAT exemptions, which prompted the previous administration to present a fiscal consolidation plan that included the repeal of some of it.

Former finance chief Carlos Dominguez previously called on the Marcos administration to retain the coverage of VAT exemptions to a few purchases only, including agricultural, food and medical products.

Instead, Recto said the government should not give away more taxes and ensure that there is no erosion of the revenue base.

On the expenditure side, Recto said there are still some leeway on spending especially in terms of reducing expenses for non-essential infrastructure projects.

For now, the DOF is focusing on the five tweaked priority measures such as the VAT on digital service providers, rationalization of the mining fiscal regime, reform on the motor vehicle users’ charge, excise tax on certain single-use plastics and the Passive Income and Financial Intermediary Taxation Act.