World Bank backs Philippine tax reform, urges fairness for businesses and consumers

As the government prepares new revenue measures, the World Bank says tax changes should raise collections without hurting growth, distorting markets, or adding pressure on Filipinos and businesses.

As the government pushes a new round of tax reforms, the World Bank said the Philippines should raise more revenue without slowing economic growth, discouraging businesses or placing a heavier burden on lower-income Filipinos.

Zafe Mustafaoglu, World Bank division director for the Philippines, Malaysia, and Brunei, said the country needs a “growth-based tax collection” system that is fair, non-regressive and does not distort the market.

“As you increase the revenue bases, a country will need to look at from all these dimensions again to make sure that it doesn’t hurt poor people or it doesn’t distort market,” Mustafaoglu said.

He added that as the Philippines advances toward upper-middle-income status, it will need more resources to fund infrastructure, education and other development priorities.

World Bank senior economist Jafar Al-Rikabi also pointed to simpler tax compliance as one way to improve revenue collection. He said making it easier for businesses and individuals to pay taxes could encourage voluntary compliance and reduce errors, helping broaden the country’s tax base without introducing additional burdens.

The World Bank’s comments came as the Department of Finance proposed higher taxes on sugary drinks, tobacco, alcohol, plastics and luxury vehicles under its broader tax restructuring package. The proposed ProGRESS Bill is expected to generate an average net revenue of ₱47.9 billion annually over four years after accounting for planned tax relief measures.

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