Strengthening Revenue Without Raising Tax Rates
Broadening the Tax Base and Improving Compliance
Finance Secretary Frederick Go emphasized that the government’s objective is not to increase statutory tax rates. Instead, it seeks fiscal consolidation while continuing to support investment and economic growth.
Rather than imposing new tax burdens, the government plans to broaden the tax base, simplify tax regulations, and improve tax administration. Long-standing incentives and tax exemptions will undergo review to ensure they support vulnerable households, attract investments, create jobs, and boost productivity.
Furthermore, technology will play a larger role in modernizing revenue collection. Through digital systems and artificial intelligence, government agencies aim to improve compliance, strengthen collections, and make paying taxes easier for both individuals and businesses.
The goal is simple: collect revenues more efficiently while maintaining a tax system that is fair, transparent, and growth oriented.
Public Finance Is About Choices
Making Every Peso Count
Department of Budget and Management (DBM) Secretary Kim Robert C. De Leon framed public finance in human terms:
“Public finance is about choices, and every choice eventually reaches a Filipino.”
For the DBM chief, fiscal discipline does not mean spending less. Instead, it means spending wisely, prioritizing essential programs, and demanding measurable results from every peso.
As the government prepares a proposed ₱7.2 trillion national budget for 2027, agencies must look beyond whether a project is simply beneficial. They must determine whether it is necessary, aligned with national priorities, and capable of delivering measurable outcomes. Equally important, agencies must demonstrate accountability for previously allocated funds.
This people-centered approach sits at the heart of Philippine public finance reform.
From Budgets to Outcomes
Measuring Success Through Real-World Impact
A major theme of the DBM reform agenda is shifting attention from expenditures to outcomes.
According to Secretary De Leon, government should not evaluate success solely through budget utilization rates or completed reports. Instead, the key question is whether public spending improves people’s lives.
Consider the following examples:
- A classroom matters when students learn better.
- Healthcare spending matters when patients receive timely treatment.
- Infrastructure matters when it improves mobility and creates economic opportunities.
In short, government must finance outcomes, not paperwork.
Moreover, this principle extends across education, healthcare, infrastructure, agriculture, disaster resilience, and social protection. More spending alone does not guarantee better results. What matters is whether citizens experience the benefits directly.
Digitalization Must Lead to Transformation
Modernizing Public Financial Management
The government is accelerating efforts to modernize public financial management systems. However, Secretary De Leon cautioned that digitalization alone is not enough.
“If a process takes three weeks on paper and three weeks online, we have simply digitized the delay.”
Consequently, the government is implementing reforms under the New Government Procurement Act to promote transparency, competition, and accountability. The DBM is also expanding COMPASS, a centralized open monitoring platform that allows citizens to track how public funds move from appropriations to actual spending.
Transparency is not merely about publishing documents online. Information becomes valuable when people can easily find it, understand it, and use it to hold institutions accountable.
Trust, therefore, is built one decision, one transaction, and one peso at a time.
Rethinking Fiscal Policy Priorities
Stability and Development Can Work Together
World Bank Senior Country Economist Jafar Al-Rikabi highlighted three common fiscal policy debates:
- Stability versus development
- Taxes versus spending
- Efficiency versus equity
Fiscal discussions often present these priorities as competing choices. In contrast, the Public Finance Review suggests that governments can pursue them simultaneously through well-designed reforms.
The review examined three scenarios:
- No fiscal adjustment: Higher public debt, slower growth, and greater vulnerability to economic shocks.
- Low-quality adjustment: Achieves fiscal targets mainly by cutting public investment, which may weaken long-term growth.
- High-quality adjustment: Combines revenue reforms and spending efficiency measures while protecting productive investments.
The third approach emerged as the preferred path because it supports economic growth, strengthens fiscal sustainability, and improves resilience.
Collect Better, Spend Better
Five Channels for Long-Term Development
The review identified five ways fiscal policy can promote sustainable development:
- Macroeconomic and fiscal stability
- Quality public investment
- Human capital development
- A stronger private sector environment
- Equity and social protection
According to the review, the country has significant opportunities to improve revenue collection without increasing tax rates. Specifically, simplifying tax rules and strengthening collection systems can reduce avoidance and improve compliance.
At the same time, the review pointed to opportunities for better government spending. Fragmented systems, disconnected processes, and procurement inefficiencies often increase costs and reduce value for taxpayers.
As a result, stronger coordination and better financial management can help government achieve more with existing resources. These improvements remain critical to advancing Philippine public finance objectives over the long term.
Turning Spending into Better Services
Closing the Gap Between Funding and Outcomes
A key priority of the review is ensuring that public spending produces better education and healthcare outcomes.
Although government spending has increased in recent years, challenges remain in translating larger budgets into better services. Consequently, policymakers continue to focus on bridging the gap between funding and actual outcomes, especially at the local government level.
The review outlines four priorities:
- Protect resources from waste and inefficiency.
- Shift spending toward programs that deliver measurable results.
- Improve service delivery systems.
- Strengthen financial management and accountability mechanisms.
The objective is straightforward: public resources should translate into better classrooms, stronger healthcare systems, more effective local services, and more resilient communities.
The Real Measure of Success
Putting People at the Center
The discussions surrounding the Public Finance Review reinforced an important principle: fiscal sustainability and national development work best when pursued together.
Better revenue collection, stronger spending discipline, modernized systems, and targeted investments can create a positive cycle of growth, trust, and improved public services. Ultimately, Philippine public finance succeeds when citizens experience tangible improvements in their daily lives.
For government leaders, development partners, and citizens alike, the message remains clear. Philippine public finance is not about balancing spreadsheets alone. It is about creating meaningful opportunities, improving essential services, and delivering lasting benefits for every Filipino.
As Secretary De Leon aptly summarized, numbers are never the end of the story. People are.
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