Diokno prefers better tax administration over luxury tax

By Luisa Maria Jacinta C. Jocson, Reporter

The Finance chief on Friday said he would rather improve tax administration to generate more revenues than impose luxury taxes.

“We will look at the proposals. Right now, I’m happy with the current tax system. It’s not perfect, it can be improved, but we will be concentrated on better tax administration,” Finance Secretary Benjamin E. Diokno told reporters.

“In fact, our debt-to-gross domestic product (GDP) ratio is 60.9%, and that’s basically because of better tax collection, appreciation of the peso and higher GDP,” he added.

Albay Rep. Jose Ma. Clemente S. Salceda recently filed House Bill No. 6993, which proposes a 25% tax on luxury or non-essential goods.

Under the proposed measure, non-essential goods include jewelry, whether real or imitation, perfume and eau de toilette, yachts, wristwatches, bags, wallets, and belts worth more than P50,000; residential property worth more than P100,000 per square meter; and alcoholic and non-alcoholic beverages worth more than P20,000 per liter.

At the same time, the bill seeks to tax paintings, antiques, secondhand automobiles, and private planes.

If enacted into law, the government is seen to raise up to P15.50 billion a year.

According to Mr. Diokno, the government is also looking into a value-added tax refund program for foreign tourists.

“Right now, we’re trying to find out the most favorable modality, or the global practice. I think it’s the third parties that usually take care of the refunds,” he said.

Malacañang previously said that President Ferdinand R. Marcos, Jr. would likely issue an executive order to implement the tax refund program. It is expected to take effect next year.

Mr. Diokno also said that the government is considering issuing more foreign currency bonds, particularly dollar- and euro-denominated bonds.

“There is demand for dollar and euro-denominated bonds. We will accelerate the process… [because] there is really strong interest,” he said, adding that another dollar-bond issuance may happen in the latter part of the first quarter or early second quarter.

The Philippine government raised $3 billion from its dollar bond issuance in January.

The Bureau of the Treasury is scheduled to offer peso-denominated fixed-rate retail treasury bonds (RTBs) on Tuesday. The bonds, which have a tenor of 5.5 years, aim to raise P30 billion.

Mr. Diokno expects the RTB auction to be “well-received.”

“I think the rates are kind of coming down because of renewed confidence. Let’s see what the market will bear. We floated, the most recent was the $3 billion, that was well received, many times over. We expect the same,” he added.

With regards to the controversial Maharlika Investment Fund (MIF), Mr. Diokno said that corporations providing capital should not be required to change their charter.

“I have an objection to the proposal to tap dividends from some corporations; it will require changing their charter,” he said.

The latest version of the proposed MIF will secure funds from government-owned and -controlled corporations or GOCCs. An earlier version of the bill drew funding from pension funds.