The Department of Finance (DOF) is proposing several tax reform measures that will generate as much as over PHP190 billion to offset the revenue losses from the proposed tax relief measures.
In a briefing Monday, DOF Undersecretary for Fiscal Policy and Monitoring Group (FPMG) Karlo Fermin Adriano said these and the higher income tax and minimum corporate income tax exemption for micro and small enterprises are part of the Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability (ProGRESS) proposed measure.
To ensure the welfare of Filipinos through a fair and equitable tax system, Adriano said the Marcos administration is granting tax relief to at least 3.13 million taxpayers, of which 96 percent are lower mid to middle income, and 78,000 micro and small enterprises, while imposing taxes on wealth.
Targeted levies on sin products and plastic waste shall also be imposed to promote a healthier, more sustainable national economy.
ProGRESS, which seeks to increase the personal income tax exemption from PHP250,000 to PHP350,000, also proposed the exemption of micro and small enterprises from the minimum corporate income tax.
While these exemptions will benefit Filipinos, DOF estimates showed that revenue losses could reach PHP5.96 billion for the minimum corporate income tax exemption and PHP61.06 billion for the higher personal income tax exemption.
To offset the losses, the DOF is pushing for the increase of sweetened beverage (SB) tax to PHP20 per liter for sugar and PHP40 per liter for high-fructose corn syrup (HFCS).
The DOF is also pushing for a unified excise tax rate of PHP72.90 on e-cigarettes starting in 2027, with 5 percent indexation beginning 2028; additional excise tax on e-cigarette devices, whether HTP vapes of novel tobacco with a specific excise tax of PHP150 per unit of the device, with 5 percent indexation starting 2028; and the taxation of novel tobacco products at PHP72.9 per 2 grams or per 2 ml.
Adriano said they are also proposing for an update on the alcohol excise tax and motor vehicle users’ charge.
To reduce the country’s heavy reliance on plastic packaging, the DOF also seeks to impose an excise tax on plastics at PHP15O per kilogram within annual indexation of 5 percent. This covers sand bags, labor bags, and sachets.
Adriano said all these tax reform measures are expected to generate as much as PHP518.71 billion from 2027 to 2030, more than enough to offset the PHP326.92 billion estimated losses from the tax relief measures.
The government will still have a PHP191.77 billion revenue gain.
Broken down, the increase and expansion of sweetened beverages tax could generate PHP296.97 billion.
Revenues from excise tax on cigarettes and novel tobacco are projected to reach PHP33.06 billion; excise tax on alcohol (PHP31.26 billion); excise tax on plastic (PHP52.19 billion); automobile tax (PHP15.64 billion); and excise on motor vehicle users’ charge (PHP89.58 billion).
“ProGRESS is a very timely intervention because many of our stakeholders, including legislators, are asking for a meaningful tax relief or fiscal relief for the middle income classes,” Adriano said.
“The middle income class pay a lot of taxes, but they’re not poor enough to qualify for the ayudas, but not rich enough to have a very comfortable life. And hence, ProgRESS is a very timely intervention because the main target(s) of progress in terms of tax relief are really the middle income classes.”
Adriano is hopeful that the proposed measures will be enacted into law within the year.
He said the DOF is also set to conduct a series of consultations nationwide to brief stakeholders about the proposed measures. (PNA)
