Marcos to DOF: Level playing field for businesses

President Ferdinand “Bongbong” Marcos Jr. told the Department of Finance (DOF) to continue looking into the current tax system in the country and find ways to level the playing field between foreign and local businesses.

President Ferdinand ‘Bongbong’ Marcos Jr. (Photo courtesy of KJ Rosales/PPA Pool)

Marcos presided over a meeting with his Cabinet members on Tuesday morning, May 30, to discuss the country’s tax system as a response to calls to review it.

During the sectoral meeting, the fiscal incentives for exports and domestic market-oriented enterprises were discussed, following calls to review the current tax framework and to find ways to level the playing field between local and foreign businesses.

“Na-discuss namin to kay Presidente and sabi niya continue to look into it kasi alam mo binabalanse namin e, meron kasi tayong tinatawag na fiscal program na hanggang 2028 and right now marami ding demands sa on the spending side so kung mamimigay ka ng mga incentives, mawawalan ka ng collection so we are studying it (We discussed this with the President and he said ‘continue to look into it’ because we are also balancing this, we have what we call fiscal program until 2028, and right now we have many demands on the spending side so if we provide incentives, we will lose collections so we are studying it),”  Finance Secretary Benjamin Diokno said in a Palace briefing.

“It’s not a perfect system so we will look for improvements but right now our revenue system is doing well,” Diokno added.

The DOF has also recommended to the President that the existing rules and distinction between registered exporters and domestic-market oriented enterprises must remain in order “to preserve the integrity of our tax framework.”

‘Tax system inherited from Duterte is better than Aquino admin’

Diokno said he reported to the President that the tax system he inherited from his predecessor, former president Rodrigo Duterte, was “much better” than the tax system that he inherited from the previous administration.

“The tax system that we inherited from President Duterte is much better than what he inherited from President Aquino because he passed tax measures that actually are real reforms,” Diokno said.

He explained that those reform packages were designed to provide income tax relief to the majority of the taxpaying community while generating revenues by increasing the tax on lifestyle products and services consumed by the top 1 percent wealthiest individuals.

“So we were able to collect 1.1 trillion out of those new taxes. And then, of course, we also increased documentary stamp tax; provided tax amnesty on estate taxes which we recently extended to 2025; fuel marking also, we post that; and financial tax among others. So that resulted in a 212.2 billion tax intake. And so, therefore, the tax system as a result, we were able to collect an additional 709.9 billion. So that is the kind of tax system that we inherited from the previous administration,” Diokno stressed.

The Finance chief also explained that prior to the implementation of Corporate Recovery and Tax Incentives for Enterprises (CREATE), which is estimated to provide private enterprises more than P1 trillion worth of tax relief over the next 10 years, “at least 1,000 projects have enjoyed incentives for at least 20 years.”

Diokno further said that prior to CREATE, tax incentives were granted “without systematic assessment of fiscal costs and benefits.”

He added that “if you ask the government how much taxes are foregone as a result of this, nobody can give you an answer because there are so many and nobody is keeping track of the incentives.”

With CREATE, those enterprises enjoying “forever incentives” were cut to only 10 years.

— Betheena Unite

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