If you have ever wondered how 24.54 million public school students get an education or how 6.4 million patients receive medical assistance in public hospitals, the answer is a massive daily math problem. Right now, the Philippine government is under intense pressure to collect enough cash to keep the lights on without drowning in debt.
Department of Finance (DOF) Secretary Ralph Recto recently warned that if the country wants to keep providing basic services, tax revenues must grow by 10.2 percent every single year from 2025 to 2028. This growth is the only way for total revenues to hit nearly PHP6 trillion by the end of President Ferdinand R. Marcos Jr.’s term and eventually breach the PHP7 trillion mark by 2030.
The stakes are personal. Last year, the DOF and its agencies collected PHP4.42 trillion, but that still fell short of the PHP5.925 trillion the government actually spent. This year, the pressure is even higher. Secretary Recto is tasked with collecting PHP13.65 billion every single day. Even with that massive haul, the government still faces a PHP4.51 billion daily deficit to meet its PHP18.61 billion daily spending target.
While some lawmakers in Congress are pushing to lower the value-added tax (VAT) to help with rising prices, Recto warns this could backfire. He notes that the estimated PHP1.39 trillion VAT collection for 2025 can only cover nine months of payroll and pensions for government workers. Furthermore, the PHP576 billion collected in excise taxes would not even come close to covering the PHP965 billion budget needed for basic and technical education.
To bridge the gap, the Bureau of Internal Revenue and Bureau of Customs are betting on digital modernization and programs like the General Tax Amnesty. Without these funds, the government might have to borrow money just to pay salaries.
In short, every percentage point of tax growth determines whether your local hospital has medicine or if the state has to take out a loan just to pay its staff.
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