DEPDev chief supports proposed tax cuts but cites potential funding gaps

Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan on Thursday expressed support for proposed measures seeking to bring down income taxes and help the low-income and middle class cope with rising commodity prices amid the Middle East fuel crisis.

However, he emphasized that the government must find new ways to fund essential public projects such as schools, hospitals, and infrastructure.

"I am in favor of reducing taxes, especially those that burden the poor and the middle class, but we have to find a replacement for very much needed tax revenues," Balisacan told reporters at the sidelines of the first quarter 2026 economic growth announcement.

The DEPDev chief said that proposals to lower income taxes, such as Senate Bill 56, would increase the take-home pay of many Filipino workers.

The bill, introduced by Senator Sherwin Gatchalian, suggests two major shifts in tax policy:

• Tax-Free Income: Raising the exemption threshold from P250,000 to P400,000 annually.
• Tax-Free Bonuses: Increasing the cap on non-taxable bonuses from P90,000 to P150,000.

‘Ticklish issue’

While Balisacan agreed that reducing taxes would increase the "purchasing power" of Filipinos, he emphasized that the loss in government revenue could stall critical infrastructure and social services.

"Reduction of taxes is a ticklish issue for economic managers because our people want better infrastructure, more schools, more hospitals, more services," the country’s chief economist said.

"And if you remove those taxes, how are you going to support those important, critical projects that are especially needed by the poor and low-income groups?"

Balisacan said that tax cuts should not come at the expense of the country's development.

He said that an alternative revenue source must be identified before moving forward with reducing taxes.

"Unless we are able to do that, what you remove might actually hurt the very group that you are trying to help,” he said. –NB, GMA News