Tax revenues must grow 10% yearly to sustain gov’t services – Recto

Finance Secretary Ralph Recto on Thursday said the country’s tax revenues must increase by at least 10.2 percent annually from 2025 to 2028 to keep government programs adequately funded and ensure fiscal stability.

Recto said the steady growth would push total revenues to nearly ₱6 trillion by the end of President Ferdinand R. Marcos Jr.’s term and breach ₱7 trillion by 2030.

He said higher collections would be driven by modernization and digitalization efforts at the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC), improved non-tax revenues, and the implementation of the proposed General and Estate Tax Amnesty programs.

In 2024, the Department of Finance (DOF) and its attached agencies collected ₱4.42 trillion in revenues, which supported key government programs such as free education for over 24 million students, medical aid for 6.4 million hospital patients, and nearly ₱900 billion in local government funding.

Recto noted that this year, the DOF must raise ₱13.65 billion daily to meet the government’s ₱18.61 billion daily spending, leaving a ₱4.51 billion funding gap per day.

He also cautioned against proposals to cut the value-added tax (VAT) rate, saying it would result in huge revenue losses and reduced public services.

“The entire VAT collection for 2025, estimated at ₱1.39 trillion, can only cover nine months of government payroll, premiums, and pensions,” Recto said.

He added that even the projected ₱576 billion in excise tax revenues would fall short of the combined ₱965-billion budget for basic, tertiary, and technical-vocational education programs.

Several measures pending in Congress seek to lower VAT to ease the burden of consumers amid rising prices, but Recto warned that doing so could jeopardize the government’s ability to fund essential services.