The Finance Department said Friday it expects revenue collection to sustain growth in the long term, despite the implementation of a tax reform package that will reduce individual and income tax rates.
Finance Secretary Carlos Dominguez III said in an interview over Bloomberg TV his agency would address the issue of revenue erosion in case the tax reform program was implemented.
“We are preparing our tax reform program that will lower tax rates for individuals and corporations. However, we have counter measure to cover those erosions in revenue and we would certainly end up with more revenue in the long run,” Dominguez said.
Dominguez said earlier the Finance Department would submit a tax reform package to the House of Representatives in September.
The tax reform package would include the reduction of corporate and individual tax rates from 30 percent to 25 percent and from 32 percent to 25 percent, respectively.
Dominguez announced the plan to reduce the tax rates for both tax brackets in several tranches within a period of up to three years.
He said to recover revenue losses, the Finance Department was studying several financing sources, such as adjusting to inflation the excise tax on petroleum products.
The tax reform package also aims to increase excise tax on gasoline to P10 from the current P4.5 per liter and the excise tax on diesel from none to P6 per liter.
The department earlier said it would review the tax exemptions amounting to about P144 billion annually.
Dominguez said the incentive program was costing the government at least P144 billion in tax perks and holidays to businesses.
“This administration is committed to rationalizing tax incentives,” Dominguez said.
“The government provides at least P144 billion in income tax perks and tax holidays. A truly serious study needs to be done about the relevance of many of those tax perks,” he said.