Manila: The chairperson of the House Ways and Means committee has applauded the Department of Finance's (DOF) decision to retract proposed hikes in capital gains, donor's, and estate taxes, describing it as a 'practical approach' that safeguards middle-class families while maintaining economic stability.
According to Philippines News Agency, Albay Representative Joey Salceda announced that the DOF decided to shelve the proposal, noting that the government is "on track to meet its fiscal consolidation goals" with a "double-digit growth in tax collection." The abandoned tax proposals were initially part of the draft Capital Markets Efficiency Promotion Act (CMEPA), aimed at bolstering fiscal buffers against economic shocks.
Salceda emphasized the importance of strategic decision-making, stating, "It takes that kind of practical wisdom to know when to push, when to recalibrate, when to sustain momentum without breaking growth." He highlighted that increasing taxes on asset transfers could deter growth-enhancing reallocations. Salceda had previously cautioned that higher capital gains taxes could disproportionately affect middle-class Filipinos, particularly those selling land, passing on inheritance, or starting small businesses.
He pointed out, "Our capital gains tax on land is already 6 percent of the gross selling price or zonal value - not just the gain. Add documentary stamp taxes. Add local transfer taxes. We are already among the highest in the region." Salceda emphasized the necessity of supporting the middle class, asserting, "The middle class is the backbone of our economy. We must make it easier, not harder, for them to build wealth across generations." He also suggested that the government should prioritize taxing luxury consumption if additional revenues were needed, stating, "Tax what you can spare. Not what you need to grow."
Finance Secretary Ralph Recto confirmed that the government has no intentions of imposing new taxes, underscoring the nation's solid fiscal position. "At this point, current revenues are more than sufficient to support our expenditure requirements," Recto stated. "We are meeting our obligations, funding key programs, and growing the economy without having to impose new taxes on our kababayan." Recto highlighted a 13.55 percent increase in total tax collections during the first quarter, amounting to PHP 931.5 billion, which he attributed to improvements in tax administration, enforcement, and digitalization.
While acknowledging the preparation of contingency measures amid global uncertainties, Recto noted that they are not necessary at present, saying, "Given our current strong fiscal performance, these are not needed at this time." To sustain growth, Recto mentioned that the DOF will concentrate on key reforms such as the CREATE MORE Act, the Ease of Paying Taxes Act, and amendments to laws on foreign investment, retail trade, and public-private partnerships. Additionally, he committed to enhancing non-tax revenue sources.
