Business Skinning Left, pagematch: , sectionmatch: 1

Business ( Leaderboard Top ), pagematch: , sectionmatch: 1

Government aims to increase tax effort to 15.3% by year’s end

MANILA, Philippines - The Aquino administration aims to raise the country’s tax effort to 15.3 percent by the end of the year  as it continues to improve tax administration, run after tax cheats and expand the tax net.

Tax effort measures the government’s ability to increase tax collection commensurate with the growth of the economy.  It is computed by dividing the national government’s tax collection by the country’s gross domestic product (GDP).

The country’s tax effort has been on an upward trend in the past four years from 12.2 percent in 2010 to 13.6 percent in 2014.

President Aquino’s economic team has set a goal of  further raising the tax effort to 16.6 percent by 2016.

The Philippines needs to boost  its tax effort so it will have more funds to spend on  public infrastructure, education, and health services.

To achieve this, the government  should be able to increase the amount of taxes it collects as the economy grows.

The Bureau of Internal Revenue and the Bureau of Customs are the government’s biggest revenue earners, together accounting for more than two-thirds of state revenues.

The Aquino administration also aims to increase the country’s revenue effort to 16.3 percent this year from 15.1 percent a year earlier.

Prior to the Asian currency crisis in 1997, revenue effort averaged 18.7 percent.

The country posted its highest quarterly tax to GDP ratio in almost a decade on the back of robust revenue collections.

Data from the Department of Finance showed that the country’s tax effort rose by .93 percentage point to 13.27 percent as of the end of March this year as tax collection grew at a faster clip than the local economy which slowed to a three-year low of 5.2 percent due to anemic state spending and weak exports.

Finance undersecretary Gil Beltran said this was the highest first quarter tax to GDP ratio growth since 2007.

Tax effort, a  closely watched economic indicator,  is used to measure the government’s ability to use tax collection to fuel economic growth.

Tax collection, which includes the take of the BIR, BOC and other offices, grew 13.4 percent to P402.9 billion in the first quarter.

  • Follow Us:
Business Skinning Right, pagematch: , sectionmatch: 1