By: Chino S. Leyco, May 28. 2024; Manila Bulletin

Finance Secretary Ralph G. Recto admitted the daunting challenge of digitizing the government’s tax system, prompting the need to explore non-tax revenue sources for additional funding.

Recto told Manila Bulletin on Tuesday, May 28, that the Marcos administration’s digitalization initiatives to improve tax administration could take about two years to reach their full effectiveness.

At the Philippine Economic Briefing last Monday, Recto cited the importance of improving tax administration in the e-commerce sector through digitalization, but “admittedly, [it] will take some time.”

“In the meantime, we have strategically tapped into non-tax revenue streams to generate additional funds without imposing new or increased taxes on our people,” Recto said.

The United Nations E-Government Survey revealed that the Philippines falls behind its regional peers in key areas of digital development such as digital transformation and trade, digital government, and digital security.

In terms of digital government, the country was ranked 89th out of 193 countries, trailing behind Singapore (12), Malaysia (53), Thailand (55), Indonesia (77), and Vietnam (86).

Despite the substantial increase in digital transactions in the Philippines, the bill seeking to levy a 12 percent value-added tax (VAT) on digital services provided by both resident and nonresident digital service providers has not yet been enacted into law.

To mitigate the impact of tax leaks, the Department of Finance has decided to increase the dividend payments of state-owned firms from a minimum of 50 percent to 75 percent.

As of the end of April, government non-tax revenues have totaled P188.8 billion, a 49 percent increase compared to the same period last year.

This growth is primarily driven by higher dividend remittances from government-owned and controlled corporations amounting to P88.6 billion as of May.

Furthermore, the government is looking to leverage non-recurring revenues through the privatization of state-owned assets.

Recto wants to generate P100 billion from the sale of government assets currently in the pipeline.

One of the proposals put forth by the finance chief involves selling the 600-hectare land currently occupied by the Ninoy Aquino International Airport (NAIA) in Pasay City.