Senate panel calls for reforms in revenue collection strategy

The Senate Committee on Finance on Tuesday is pressing the Department of Finance to explain the repeated failure by the government to meet its revenue collection targets in recent years.

During the chamber’s deliberations on the proposed 2026 budget of the DoF and its attached agencies, Senator Win Gatchalian demanded answers from Finance Secretary Ralph Recto over the government’s repeated failure to meet revenue collection targets, raising concerns about inefficiencies and systemic challenges hampering fiscal performance.

Gatchalian pointed out that while the government exceeded revenue targets in 2020, 2021 and 2022, it has largely underperformed in most years since 2015.

“But we saw a good trend in non-tax revenues in the last three years. I believe these include dividends and assets,” Gatchalian stressed.

Challenges faced by the government

“My question is, what are the challenges faced by the government? Why does it continue to miss its revenue targets, and what innovations have been implemented to improve non-tax revenues?” he asked.

In response, Recto attributed the shortfalls primarily to the impact of global economic conditions and slow domestic growth.

“If you have a global economic slowdown, naturally it affects local GDP growth and the revenues of the Bureau of Customs,” Recto said.

Philippine economic performance

The finance chief emphasized that revenue collection is closely tied to the country’s economic performance.

Lower trade volumes, sluggish investment flows, and a weakened global economy all contribute to reduced collections, particularly for the Bureau of Customs, which relies heavily on import activities.

Recto also cited corruption as a persistent obstacle to growth and revenue generation.

He said that while the government has spent heavily on infrastructure, particularly on flood control projects, some of these investments failed to deliver economic returns due to mismanagement, “ghost projects,” or substandard execution.

Recto, a former senator, presented the DoF’s proposed 2026 budget during the hearing before the Senate Finance Subcommittee A.

He framed the department’s fiscal roadmap within the context of Ambisyon 2040, the government’s long-term vision to transform the Philippines into a “prosperous middle-class society where no one is poor.”