IMF Says That ₱350B Can Be Raised via New Tax Measures

The International Monetary Fund (IMF) stated that the Philippines can gather up to ₱350 billion with new and additional tax measures. With possible new tax measures, the amount predicted to be generated would be equal to an estimated 1.52% of the gross domestic product (GDP).

“There is ample scope to enhance revenue mobilization, which can underpin a faster medium-term fiscal consolidation while securing resources for the authorities’ social and development plans,”  mentioned the IMF.

The IMF likewise stated that “Based on staff’s assessment, there is significant scope to raise additional tax revenues – of at least 1.4 percent of GDP above the baseline under VAT, corporate and personal income taxes. This will be more than enough to achieve a faster consolidation, with the remainder of about 0.7 percent of GDP used to finance high-priority spending and increase support for the vulnerable,”

This would include value added tax (VAT) base broadening with the lifting of exemptions or zero-rating with 0.60% or ₱142.5 billion. After this, it would be a new excise tax on e-cigarettes, cigarettes, and a health tax of 0.39% of the GDP or ₱91 billion. Next would be motor vehicle user charges with 0.15% or ₱38.3 billion.

Similar possible additional tax measures would be an increased excise tax on coal that could generate ₱35.4 billion or 0.15%, a gaming tax of 0.06% or ₱13.1 billion, and the removal of excise tax on pick-ups with 0.03% or ₱8.2 billion.

For the IMF, these new tax measures are predicted to generate over ₱20.1 billion for 2023 if the taxes on digital services, mining, plastic bags, and pre-mixed alcohol beverages are taken into account.

“In the near-term, the Philippines can pursue high-quality tax reforms to boost revenue collection and improve tax composition… The tax reform should focus on improving the overall efficiency and equity of the tax regime while excluding policies that are difficult to implement and administer, or that have a negligible revenue impact,” mentioned the IMF.

Source: Philstar