DOF Undersecretary Adriano Outlines Marcos Administration’s Plan to Offset Tax Cut Losses

In a recent interview on ANC’s “The Boardroom,” Undersecretary Karlo Fermin Adriano of the Department of Finance (DOF) sat down with Salve Ibañez to discuss the administration’s strategy for handling the fiscal gap created by recent tax cuts. The conversation, recorded on 26 October 2026, sheds light on the government’s approach to preserving revenue while still pursuing the populist promise of lower taxes. For ordinary Filipinos, the outcome of these discussions could affect everything from the price of rice at the sari‑sari store to the funding available for barangay health centers.

Understanding the Fiscal Gap from Recent Tax Reductions

Undersecretary Adriano began by acknowledging that the tax cuts enacted earlier this year have resulted in a notable reduction in government receipts. While he did not disclose exact figures, he described the shortfall as “billions” in lost revenue, a term that signals a substantial impact on the national budget. He emphasized that the administration is mindful of the need to balance the desire for tax relief with the responsibility of funding essential public services.

The undersecretary explained that the loss is not merely an accounting entry; it translates into real challenges for agencies that rely on DOF allocations. For instance, the Department of Health may see tighter budgets for vaccine procurement, while the Department of Education could face constraints in its school feeding program. In this sense, the fiscal gap has a direct line to the daily lives of Filipinos, especially those in rural barangays where government support is a lifeline.

Adriano also noted that the administration’s fiscal outlook remains cautiously optimistic. He highlighted that the tax cuts were part of a broader economic stimulus package aimed at boosting consumer spending and encouraging investment. The undersecretary suggested that the anticipated growth in private sector activity could eventually help offset the immediate revenue loss, though he cautioned that such benefits would take time to materialize.

He stressed that the DOF is closely monitoring the macroeconomic indicators to gauge whether the tax cuts are delivering the intended economic boost. This monitoring includes tracking consumer price index movements, employment rates, and the performance of key export commodities such as coconut and banana. The undersecretary’s remarks underscore the delicate balancing act the government faces: maintaining fiscal discipline while pursuing policies that stimulate growth.

Revenue‑Generating Measures Under Consideration

When asked about the concrete steps the DOF plans to take to close the revenue gap, Adriano outlined a multi‑pronged approach. He indicated that the department is reviewing several avenues to raise funds without imposing new taxes on the broader populace. One of the primary tools under consideration is the tightening of tax compliance mechanisms, particularly in sectors where informal economic activity is prevalent.

The undersecretary highlighted the importance of enhancing the efficiency of tax collection agencies, such as the Bureau of Internal Revenue (BIR). He suggested that improving data analytics and expanding digital filing platforms could help capture revenue that is currently slipping through the cracks. By making compliance easier for taxpayers and harder for evaders, the government hopes to recover a portion of the lost billions.

In addition to compliance upgrades, Adriano mentioned the possibility of revisiting certain tax incentives that were granted to corporations and special economic zones. He clarified that the administration is not looking to dismantle all incentives but is instead conducting a “value‑for‑money” assessment to ensure that the benefits granted are aligned with national development goals. This review could lead to a recalibration of incentives, potentially phasing out those that have not delivered the promised investment or job creation.

Adriano also touched on the prospect of expanding non‑tax revenue streams, such as fees from government services and the monetization of state‑owned assets. While he did not provide specifics, he indicated that the DOF is exploring ways to make public utilities more financially sustainable, which could generate additional cash flow for the national treasury.

Implications for Local Communities and Everyday Filipinos

The undersecretary’s explanations carry weight for barangay officials and community leaders who rely on national allocations for local projects. If the DOF succeeds in tightening compliance and adjusting incentives, the resulting revenue could help sustain funding for critical programs such as the Conditional Cash Transfer (CCT) scheme, which many families depend on during the lean season.

For small business owners, especially those operating sari‑sari stores or jeepney cooperatives, the emphasis on better compliance may raise concerns about increased scrutiny. However, Adriano reassured that the government's intent is not to penalize honest taxpayers but to level the playing field for those who have been operating outside the formal economy. He suggested that a more robust tax system could ultimately lead to a healthier market environment, where legitimate businesses are not undercut by informal competitors.

In the health sector, the DOF’s revenue‑raising efforts could influence the availability of funds for the Department of Health’s primary care initiatives. Rural health units, which often depend on DOF‑allocated budgets for essential medicines and equipment, may see steadier financing if the government successfully offsets the tax cut losses.

Education is another sector where the impact will be felt. The Department of Education’s budget for school supplies, teacher salaries, and infrastructure projects is partially derived from the national treasury. A successful offset strategy could help ensure that the construction of new classrooms in remote provinces proceeds without delay, preserving the promise of quality education for all Filipino children.

Political Context and the Administration’s Narrative

Adriano’s remarks must be viewed against the broader political backdrop of the Marcos administration’s agenda. The government has consistently framed tax cuts as a means to alleviate the cost of living for ordinary Filipinos, a narrative that resonates strongly during the festive season of Pasko when families stretch their budgets. By presenting the tax cuts as a populist measure, the administration seeks to bolster its support base ahead of upcoming mid‑term elections.

Nevertheless, the undersecretary’s candid acknowledgment of the “billions” in lost revenue signals a willingness to confront the fiscal realities behind the political rhetoric. This transparency, albeit limited, could be interpreted as an effort to maintain credibility with both the public and the business community, which has expressed concerns about fiscal sustainability.

In the Senate and the House of Representatives, lawmakers have begun probing the DOF’s plans, seeking assurances that the government will not compromise essential services in the pursuit of tax relief. While Adriano did not detail any legislative negotiations, his reference to ongoing reviews of tax incentives suggests that the administration is preparing to justify its fiscal strategy before congressional committees.

The interview also hinted at the role of the Office of the Ombudsman in overseeing the implementation of any new revenue‑raising measures. By emphasizing compliance and the elimination of loopholes, the DOF aligns its approach with the Ombudsman’s mandate to combat corruption and ensure that public funds are collected and utilized properly.

Economic Outlook and Potential Risks

From an economic perspective, the success of the administration’s offset plan hinges on several variables. First, the pace of economic recovery post‑pandemic will influence how quickly private sector growth can compensate for reduced tax receipts. Adriano indicated that the government is closely watching investment trends, particularly in infrastructure projects that could generate ancillary tax revenue.

Second, the effectiveness of the BIR’s enhanced compliance mechanisms will be crucial. If the agency can significantly improve tax collection without overburdening small taxpayers, the fiscal gap could be narrowed more swiftly. However, there is a risk that aggressive enforcement could alienate informal workers, potentially driving them further underground.

Third, global commodity price fluctuations could affect the Philippines’ trade balance, indirectly influencing tax revenues derived from customs duties. While the interview did not delve into external factors, Adriano’s mention of monitoring export performance suggests that the DOF remains alert to external shocks that could exacerbate fiscal pressures.

Finally, public perception will play a decisive role. If citizens feel that the government is delivering on its promise of lower taxes while still maintaining public services, the political capital gained could outweigh short‑term fiscal concerns. Conversely, any perceived erosion of services could fuel dissent, especially in provinces where government programs are lifelines.

Looking Ahead: What Filipinos Should Expect

As the DOF refines its offset strategy, Filipinos can anticipate a series of policy adjustments aimed at tightening tax compliance and reassessing incentives. While the undersecretary did not announce specific timelines, his remarks suggest that the department will roll out these measures in a phased manner, allowing time for stakeholders to adapt.

Community leaders are encouraged to stay informed about changes that may affect local funding streams. Barangay captains, for example, may need to engage with municipal treasurers to understand how any adjustments in national allocations could impact barangay projects, from road repairs to health outreach programs.

For the broader public, the administration’s emphasis on preserving essential services while pursuing tax relief offers a mixed signal. On one hand, the promise of lower taxes aligns with the desire for more disposable income, especially as families prepare for the holiday season. On the other hand, the need to offset billions in lost revenue underscores that the government must balance this desire with the fiscal reality of funding public goods.

In the coming months, the DOF is likely to release further details on its compliance initiatives and incentive reviews. As these developments unfold, the impact on everyday Filipinos will become clearer, shaping the narrative of whether the Marcos administration can deliver on its pledge of a more prosperous and equitable Philippines.

By Bella Reyes, Staff Writer

This article was produced with AI-assisted research and editorial support. Reporting is based on the source material cited below. Sources: ANC 24/7 video report (26 October 2026); ANC 24/7; Global1.News