MANILA (UPDATE 2) - President Ferdinand Marcos Jr on Monday said the government would impose taxes on digital goods and services, and raise public spending to over P7 trillion during his term.

“Our tax system will be adjusted in order to catch up with the rapid development of the digital economy including the imposition of value added tax on digital service providers,” Marcos Jr said during his first State of the Nation Address.

By imposing duties on digital services, the government could generate as much as P11.7 billion in the year 2023 alone, the president said.

Marcos asked lawmakers to pass what he called the Internet Transaction Act or E-Commerce Law, which he said aims to regulate commercial activities through the internet or electronic means.

Marcos said this is to “ensure that consumer rights and data privacy are protected, innovation is encouraged, fair advertising practices and competition are promoted, online transactions are secured, intellectual property rights are protected, and product standards and safety are observed.”

Aside from the digital tax, Marcos also pushed two new tax reform packages.

He said the Valuation Reform Bill seeks to establish real property values and valuation standards across the country, and develop a database for this.

Another tax package is the Passive Income and Financial Intermediary Taxation Act, which he said seeks to reform taxes on capital income and financial services.

MEDIUM TERM ECONOMIC GOALS

Marcos is also eyeing to increase the national budget to P7.712 trillion in 2028 from P4.955 trillion in 2022 and P5.086 trillion in 2023 to ensure the "continuous implementation of priority programs."

He said his medium term fiscal strategy "seeks to attain short-term macro fiscal stability while remaining supportive of the country's economic recovery."

Once adopted, the strategy will anchor the annual spending and financing plan," he said.

Marcos said he aims to reduce the poverty rate to single-digit or 9 percent by 2028.

He also aims to reduce the debt-to-GDP ratio to less than 60 percent by 2025, from the current ratio of 63.5 percent.

• Philippines' debt-to-GDP ratio balloons to 63.5 percent as of end March

The Philippines’ sovereign debt slightly dipped to P12.5 trillion in May from a record P12.76 trillion in April. But with further borrowings expected, the debt is seen to balloon to over P13 trillion by the end of the year.

Finance Secretary Benjamin Diokno earlier assured the public that the country's economic growth could easily outgrow the debt.

Echoing the earlier statements of Duterte's economic managers, Marcos said the economy is seen to grow by 6.5 percent to 7.5 percent in 2022.

The economy expanded by faster-than-anticipated at 8.3 percent in Q1 as COVID-19 mobility restrictions eased.

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