“The Department of Finance backs off from raising taxes on capital gains, estates, and donations—but vigilance remains, as other tax reforms targeting passive income are still in play.”
From the Sidelines
By: Ray G. Talimio Jr.
In a significant policy reversal, the Department of Finance (DOF) has officially withdrawn the controversial “GROWTH Bill”—its proposal to increase the capital gains tax (CGT), estate tax, and donor’s tax from 6% to 10%. The decision was confirmed by House Committee on Ways and Means Chair Rep. Joey Salceda, who received the formal withdrawal letter from DOF on April 29, 2025.
Citing stronger-than-expected revenue collections, a double-digit growth in tax take, and stable progress toward fiscal consolidation, the DOF acknowledged that such hikes were no longer necessary at this time. This move is both pragmatic and welcome—and shows that public pressure, reasoned advocacy, and sectoral dialogue can still influence policy.
Rep. Salceda rightly commended Secretary Ralph Recto’s responsiveness to economic realities and his willingness to recalibrate. “It takes practical wisdom to know when to push, when to recalibrate, and when to sustain momentum without breaking growth,” Salceda said.
The GROWTH Bill had come under strong criticism from professionals, MSMEs, financial planners, and civic groups—myself included—because of its disproportionate impact on middle-class families and long-term savers. The proposal would have penalized ordinary Filipinos transferring modest property across generations, selling land to fund retirement, or building capital for small businesses.
Even Salceda warned that raising CGT, especially on land, could trigger capital flight and discourage productive investments. He stressed that our capital gains tax regime is already among the highest in the region, and that layering additional taxes (like DST and local transfer taxes) creates further barriers for economic mobility. “We must make it easier, not harder, for families to build wealth across generations,” he noted. On this, we agree completely.
Yet while the withdrawal of the GROWTH Bill is a relief, it does not mean the tax reform agenda has cooled. CTRP Package 4—which includes proposals to tax passive income from Foreign Currency Deposit Units (FCDUs), savings, time deposits, insurance, and certain investment instruments—remains on the table. This means interest earned by ordinary depositors, OFW remittances, and even small investors could still be affected, depending on how the final version of Package 4 is shaped.
It’s important that we don’t confuse one tactical retreat with the end of the broader campaign. While the estate, donor’s, and CGT increases under the GROWTH Bill are now shelved, the public must stay vigilant against piecemeal insertions of similar burdens under other legislative vehicles.
Instead of raising taxes by default, the government must double down on improving collection efficiency, enforcing final and long-unpaid liabilities, and ensuring that public funds are spent transparently and accountably. The Philippine fiscal problem has never been just about collecting more—it’s about managing better. That’s where the real reform lies.
If we truly want inclusive growth and fiscal resilience, we should follow the logic that Salceda himself proposed: “Tax what you can spare, not what you need to grow.” That means luxury goods and unproductive assets—not modest savings, retirement plans, or inheritance passed on by hardworking parents to their children.
The public spoke. The experts spoke. The DOF recalibrated. That’s how democracy should work.
But we are not yet done.
Photo Credits:
Department of Finance Building. Photo by Politiko (Facebook/@PolitikoPH)
Sources:
• House Committee on Ways and Means press release, April 29, 2025
• Statement by Rep. Joey Salceda on the withdrawal of the GROWTH Bill
• News report by Billy Begas, Politiko, April 2025
• Prior From the Sidelines columns on CGT hikes and fiscal trust
Disclaimer:
This article is intended for public information and policy dialogue purposes. The views expressed are those of the author and do not necessarily reflect those of any organization he may be affiliated with.
About the Author:
Ray G. Talimio Jr. is Past President and Past Chairman of the Board of the Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. He is also Chairman of the MSME Development Council of Misamis Oriental and Cagayan de Oro, Co-Chairman of the Economic Development Committee of RDC-X, Chairman of BIMP-EAGA for Northern Mindanao, and a national and local officer of the Philippine Institute of Certified Public Accountants (PICPA). He advocates for sustainability-driven enterprise development and public-private sector collaboration.
