Slower fiscal consolidation seen as gov't vows no new taxes

The start of 2024 confirmed a longstanding rumor of a significant change at the Department of Finance (DOF): a new secretary was coming.

- By LOUISE MAUREEN SIMEON

True enough, veteran lawmaker Ralph Recto returned to the economic team.

Recto's appointment in January signaled a completely different direction, fiscally speaking, as the former senator maintained that he is not inclined to impose additional taxes, especially consumption-based ones, so as not to burden Filipinos more.

No matter how unpopular they may be, new taxes may be needed, considering that the government is still faced with a limited fiscal space.

But Recto has been firm in his view that any increase in taxes should be the last resort of the administration and that the focus should first be on collecting what needs to be collected.

Leonardo Lanzona, economist and professor at the Ateneo De Manila University, said such a stance is Recto's most glaring politicized principle in the DOF.

"And yet, this year, taxes were added to the use of digital service platforms. This indicates the continued reliance on indirect taxes, disproportionately shouldered by the low and middle-income classes while leaving the richer classes virtually unaffected," Lanzona told The STAR.

President Marcos, in October, enacted into law the imposition of a 12-percent value-added on all digital services in the Philippines.

The new law on digital services covers online search engines, marketplaces, cloud services, online media, online advertising and digital goods.

It covers video streaming such as Netflix, Viu, Prime Video and HBO; music streaming like Spotify and Apple Music; and service vendors iTunes Store and Google Play, as well as video games like Activision and Nintendo.

Other than the pending tax proposals before he came in, Recto has no plans to introduce new ones directly attached to his name.

De La Salle University economist Ma. Ella Oplas also does not believe that there is a need for a new set of taxation that could burden taxpayers.