By Kenneth Christiane L. Basilio, Reporter
LEGISLATORS need to approve pending tax measures before the 19th Congress ends to help the government meet its 2025 revenue collection goals, Revenue Commissioner Romeo D. Lumagui, Jr. said.
Measures yet to be passed include an excise tax on single-use plastics, the rationalization of the mining fiscal regime, tax reforms in the Philippine capital markets, and a proposed hike to the motor vehicle road user charge.
The House of Representatives has approved the pending tax measures, some as early as 2022; while its counterpart measures are stalled at the Senate.
“It will be helpful for the BIR if these laws are passed for us to achieve our collection goal; because our collection goal assumes that these laws will be passed this year,” he told BusinessWorld on the sidelines of a House hearing last week.
“Our goals will be affected if these laws are not passed because these pending tax measures were included in the budgeting (of the 2025 national budget),” he added.
Expected government revenue was forecast at P4.64 trillion in 2025, against an approved P6.326-trillion national budget, according to the Finance department statement.
Direct tax revenue is expected to account for P4.3 trillion of government revenue, according to the Budget department. The BIR is expected to generate P3.2 trillion, while the Bureau of Customs contribution is pegged at P1.06 trillion.
Meanwhile, non-tax revenue and privatization of government assets are expected to supply P210 billion and P101 billion, respectively.
While the 19th Congress is scheduled to end on July 27, both the Senate and House of Representatives will go on a four-month break from February to June to give way for the 2025 midterm elections.
Albay Rep. Jose Ma. Clemente S. Salceda, who heads the House ways and means committee, said legislators will likely approve reforms to the mining fiscal regime and capital markets before the 19th Congress ends, citing close coordination between the legislative chambers.
“We definitely have time for the mining fiscal regime and the capital markets taxation reform,” he told BusinessWorld via Viber.
“We are moving towards a meeting of minds,” Mr. Salceda said, referring to efforts to tax the country’s capital markets. He hopes the Senate will adopt his proposal for a corporate pension scheme, which could expedite the bill’s approval by bypassing the bicameral conference committee.
Meanwhile, he said that provisions promoting mining industry transparency and curbing transfer pricing “are still in the Senate,” which hopes will be retained by the Senate.
The mining and capital markets measures could generate P6.3 billion and P8.2 billion a year respectively, according to Mr. Salceda.
Analysts said that passing major tax bills before the end of Congress is crucial for the government to meet its revenue collection targets. Failing to do so could widen the fiscal deficit, forcing the government to resort to borrowing to sustain spending.
“These tax measures are critical for achieving the government’s 2025 revenue collection goals as they aim to expand the tax base and address revenue gaps,” John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said via Viber.
“Failure to pass these tax measures could widen the fiscal deficit. The government might struggle to meet its revenue collection targets, forcing it to borrow more and potentially raising public debt levels,” he added.
The pending tax bills could face an uphill battle as legislators seeking reelection could be reluctant to support new taxes.
“It might be tricky for reelectionists to support a measure that will impose or increase taxes… because businesses and the public are normally averse to paying more taxes,” Jean S. Encinas-Franco, a University of the Philippines political science professor, said via Viber.
Politicians should make the case for prospective taxes to mitigate the risk of electoral blowback, according to Anthony Lawrence A. Borja, an associate political science professor at De La Salle University.
“All taxes face the same political challenge of trying to justify why the government should dip into private pockets for public funds,” he said via Facebook Messenger.
“If they want these passed, then lawmakers can power through the reluctance in their own ranks while providing convincing justifications for such measures,” he added.
They said it is possible that incumbents will let the next batch of legislators deal with the pending tax measures.
“They might reason out that they do not have the time or just leave it to the next batch of legislators to decide,” said Ms. Franco.
The government should explore “alternative revenue sources” if pending tax reforms are not approved to support the national budget without having to borrow, according to Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co.
“If these measures are not passed, the government could explore alternative revenue sources such as increasing taxes on other goods and services, implementing new fees or levies, or seeking new foreign investment,” he said via Viber.
“The government could focus on improving tax collection efficiency and cracking down on tax evasion to ensure that existing revenue streams are maximized,” he added.
Meanwhile, Mr. Rivera said “adjustments” to the excise tax rates on fuel, alcohol and tobacco could help support government revenue.
The House is currently revisiting excise tax rates on tobacco products amid the “increasing illicit trade” in cigarette products, Mr. Salceda said. “We hope to fix the administration of excise taxes towards the end of the term (19th Congress).”
The revenue commission collected P130.91 billion in tobacco excise taxes in the first 11 months of 2024, well behind the pace needed to hit the P185.34-billion target.