MANILA – The Asian Development Bank (ADB) approved a USD400-million loan to help the Philippines achieve its medium-term fiscal strategy and finance its post-pandemic economic recovery through revenue mobilization, modernizing tax administration, systems and processes.
In a statement on Tuesday, the ADB said the Domestic Resource Mobilization (DRM) Program Subprogram 1 is ADB’s first policy-based loan for DRM reform.
The program addresses the country’s need to tackle discrepancies in tax policy frameworks to boost tax compliance, reduce tax avoidance and raise more revenues from activities and products that have a major impact on the environment or contribute to climate change.
“The program recognizes that DRM reforms necessitate not only raising revenue, but also designing a revenue system that fosters inclusiveness, encourages good governance, promotes investments and job creation, reduces inequality, and tackles climate change,” said ADB senior economist for public finance Aekapol Chongvilaivan.
“ADB supports the government’s DRM program, which will result in a higher tax-to-gross domestic product (GDP) ratio and ensure sustainable financing for the country as it sets out to achieve its goals under the Philippine Development Plan (PDP) 2023‒2028,” Chongvilaivan said.
Under the PDP 2023-2028, the Philippines aims to raise its tax-to-GDP ratio to at least 15.9 percent by 2026.
Under the DRM program, the Philippine government is pursuing the digital transformation initiative of the Bureau of Internal Revenue.
The project aims to modernize key taxpayers’ services, including online tax registration, return filing and payment.
The ADB said the project can potentially increase the ratio of actual tax revenues to tax potential, from 75 percent in 2020 to at least 85 percent by 2026. (PNA)