Diokno says existing Philippine tax system must be preserved; review to continue
Finance Secretary Benjamin Diokno on Tuesday said the Philippines’ tax system must be preserved, but added that the country’s economic managers will continue to review it.
“There is reason to believe that we need to preserve the existing tax system. It’s not perfect but we continue to review it – if there are some areas we can improve on it, we will improve on it,” Diokno said at a Palace press briefing.
Diokno said the tax system was discussed with President Ferdinand “Bongbong” Marcos Jr. during a sectoral meeting earlier in the day. He said Marcos tasked them to “continue to look into it” as there is also the need to balance the system.
Diokno further acknowledged the tax system that the present administration inherited from the Duterte government.
“Na-discuss namin iyon kay Presidente and sabi niya continue to look into it kasi alam mo, binabalanse namin. Mayroon kasi tayong tinatawag na fiscal program na hanggang 2028 and right now marami rin demands sa spending side so kung mamimigay ng mga incentives ay mawawalan ka ng koleksiyon – so we are studying it,” Diokno said.
“It’s not a perfect system so we will look for improvements but right now our revenue system is doing well, okay. So, sabi ko nga iyong namana namin kay Presidente Duterte na tax system is much, much better than the tax system that he inherited from the previous administration,” he added.
Meanwhile, Diokno mentioned that from 2016 to 2020, the Philippines “posted the lowest VAT efficiency ratio in the ASEAN region at 40% based on total consumption.”
Diokno said the efficiency rate was low even with the highest VAT rate compared with other countries, saying that this is because of a lot of exemptions in the tax system.
“So, the various incentives and exemptions granted outside the Philippine Tax Code erodes the revenue base requires the establishment of safeguards in tax administration to prevent abuse which further inflates the true cost of granting incentives,” Diokno said.
He then said the distinction between registered exporters and domestic market oriented enterprises must remain to preserve the integrity of the country’s tax framework. — RSJ, GMA Integrated News
This article Diokno says existing Philippine tax system must be preserved; review to continue was originally published in GMA News Online.