DoF asks Congress to prioritize key tax reforms

THE DEPARTMENT of Finance (DoF) wants the 20" Congress to prioritize several tax measures to help support the government's fiscal consolidation effort, a Finance official said on Wednesday.

- Kenneth Christiane L. Basilio

The government is considering a domestic top-up tax for multinational companies in the Philippines and an excise tax on single-use plastics, alongside general tax and estate tax amnesties, Finance Undersecretary Karlo Fermin S. Adriano said.

These measures could help bolster efforts to cut down government debt and sustain economic growth via state spending amid global uncertainties, shifting trade relations and geopolitical conflicts, he added.

“Right now, our debt-to-GDP (gross domestic product) ratio is still around 61-62%, and we want to have a fiscal buffer if there will be a crisis,” Mr. Adriano told lawmakers at a hearing at the House of Representatives. “We want to do fiscal consolidation at the moment, and at the same time we want to spend more at the moment given global uncertainties.”

The government is hard-pressed to tap new revenue streams as mounting public debt adds strain to already limited fiscal space.

As of end June, the debt-to-GDP ratio rose to 63.1%, its highest level since 2005. The figure remains above the 60% threshold that multilateral lenders view as manageable for developing economies.

The DoF is pushing for an excise tax on single-use plastics as a way to reduce the use of plastic as the Philippines is among the top contributors of plastic pollution in waterbodies globally, said Mr. Adriano.

The proposal was one of the 28 priority bills identified by the Legislative-Executive Development Advisory Council in the 19 Congress. While it was approved by the House on third reading in 2022, the measure never made it out of the Senate Ways and Means Committee.

The DoF is looking at levying a P150-per-kilogram tax on single-use plastics with an annual 4% increase, Mr. Adriano said.

“Previously, it only covered single-use plastic bags, like semitransparent plastics and sando bags. Now, we're considering to expand the coverage,” he said.