No new taxes to be imposed, says DOF
MANILA, Philippines — The Department of Finance (DOF) has withdrawn proposals from a bill that could have raised taxes on capital gains.
Capital gains taxes are levied on the sale, exchange, or disposal of property. In a statement to reporters, the DOF said that despite circulating reports, no new taxes will be imposed, citing the country’s robust fiscal position.
“Strategic measures were prepared to ensure fiscal sustainability and provide necessary buffers amid rising global economic uncertainty due to political tensions, prolonged higher interest rates, and unpredictable trade policies. But given our current strong fiscal performance, these are not needed at this time,” DOF Secretary Ralph Recto said.
However, the DOF did not specify the source of these reports or clarify where the proposed measures originated.
In a separate statement, however, House Ways and Means Committee Chair Rep. Joey Salceda (Albay 2nd District) told reporters that the DOF had written to him to withdraw its proposals to increase capital gains, donor's and estate taxes under a draft bill.
Salceda shared a letter from the DOF stating that the agency was withdrawing its recommendations to amend the Capital Markets Efficiency Promotion Act bill.
“The Department respectfully requests to withdraw consideration thereof in vire of the better-than-expected revenue performance during the first quarter of the year,” the DOF said in its letter to Salceda.
The lawmaker welcomed Recto’s move, thanking him for his openness to discussion. Salceda had earlier expressed concern that raising capital taxes could trigger capital flight and hinder the transfer of land and investments to more experienced hands.
"Our capital gains tax on land is already 6% of the gross selling price or zonal value — not just the gain. Add documentary stamp taxes. Add local transfer taxes. We are already among the highest in the region," Salceda explained.
"Taxing the transfer of assets more heavily discourages growth-enhancing reallocations. It sends the wrong policy signal — that we would prefer assets to remain idle rather than be reinvested productively," he added.
The middle class would be hit hardest by the policy, particularly when selling land or starting small businesses.
Instead of raising capital gains taxes, Salceda suggested that it would be more appropriate to impose higher taxes on luxury goods.
"Tax what you can spare. Not what you need to grow," Salceda said. "That means the Louis Vuittons of this world, not the one-room condominiums of the working class." — with reports from Dominique Flores
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