No need to revise revenue targets yet — Finance chief

There is no need to revise revenue targets yet as the government is still on track to meet its fiscal targets on the back of efforts to enhance tax administration, Finance Secretary Ralph G. Recto said.

“Our revenue collection today seems to be on target. No need to revise it yet,” Mr. Recto told reporters on Monday.

Latest data from the Treasury showed that the National Government’s budget gap widened by 0.65% to P272.6 billion in the first quarter, as state revenues jumped by 14.05% to P933.7 billion.

Broken down, tax revenues rose by 12.83% to P820.3 billion as Bureau of Internal Revenue (BIR) collection climbed by 17.15% to P591.8 billion and Bureau of Customs (BoC) collections went up by 2.35% to P218.9 billion.

This year, the government is expected to generate P4.3 trillion in revenues, equivalent to 16.1% of gross domestic product (GDP).

Mr. Recto said he will meet with BIR and Customs officials soon to discuss revenue targets for this year and until 2028.

He noted that the BIR’s collections are “pretty good” so far. The agency is responsible for generating about 70% of the government’s revenues.

“If you follow that growth rate, there’s no need to borrow more. We’re hitting the targets. We hope that continues all the way up to the end of the year,” Mr. Recto added.

The BIR is expected to raise P3.055 trillion this year.

EYE ON E-COMMERCE
Mr. Recto said they are also looking for ways to better tax the digital economy. In 2023, the digital economy contributed 8.4% to the country’s GDP or equivalent to P2.05 trillion.

“We have to be able to collect those taxes in e-commerce. It’s harder to collect from them. That will be part of our strategy,” Mr. Recto said.

One of the Finance department’s priority measures is the bill seeking to impose a 12% value-added tax on digital transactions. Senators are set to hold plenary debates on the measure.

The BIR also recently issued a revenue regulation which imposes a withholding tax on the gross remittances made by electronic marketplace operators and digital financial services providers to sellers and merchants.

“It’s important that we’re able to catch up with how consumers behave and that we’re able to collect taxes and revenues through digital platforms as well,” Mr. Recto added.

Apart from tax collection, Mr. Recto said the department is also looking at ramping up nontax revenues through privatization, Treasury income and dividends. 

The Finance chief recently ordered government-owned or -controlled corporations (GOCCs) to increase the mandatory dividend remittances to 75% of their annual net earnings in 2023 from 50% previously.

Mr. Recto said he is also looking to continue to implement the higher remittance rate in the coming years.

Data from the Department of Finance showed that dividend collections from GOCCs surged to P39.8 billion as of April 24 from P8 billion a year earlier. — Luisa Maria Jacinta C. Jocson