Tax Effort rises to 22-year high

MANILA, Philippines — The share of the government’s tax collections to gross domestic product (GDP) rose to a 22-year high of 15.1 percent in 2019 as revenue generating agencies exhibited improvements in their respective collections, the Department of Finance (DOF) said yesterday.

Citing preliminary data, Finance Secretary Carlos Dominguez said the Philippines’ tax effort in 2019 rose to 15.1 percent from 14.7 percent in 2018.

“This is the best we have achieved in 22 years,” the finance chief said.

The economy grew by 5.9 percent in 2019, slower than the previous year’s growth rate of 6.2 percent.

Earlier, the DOF reported that the collections of the Bureau of Internal Revenue (BIR) amounted to P2.172 trillion last year, 6.78 percent below the agency’s P2.33 trillion target. This was, however, still 10.67 percent higher than the previous year’s collection of P1.962 trillion.

Meanwhile, the Bureau of Customs’ collection in 2019 reached P630.57 billion, which represented 95.4 percent of its goal of P661.04 billion for the period. Nevertheless, BOC was still able to improve its collections by 6.32 percent as compared to its P593.11 billion level in 2018.

Together, the DOF said the BIR and the BOC were able to generate P2.8 trillion in total tax revenues last year.

Going forward, Dominguez said the government expects its tax effort to further expand this 2020.

“We expect the tax effort to be further reinforced this year from the better tax administration and intensified anti-smuggling drive of the government,” the finance chief said.

Furthermore, he said the passage of the remaining tax reform packages and the increasing amount of dividend remittances from state-run corporations would also boost revenue generation and increase the tax effort.

Dominguez also cited the continuous crackdown against erring offshore gaming operators in the country, which resulted in a 169-percent jump in tax collections from the sector last year (to P6.42 billion).

“We expect to collect significantly more this year as we properly document and audit operations of these service providers,” the secretary said.

In 2019, the administration passed two legislative bills which increased taxes on sin tax products.

The first one, Republic Act 11346, increased the excise tax imposed on regular and electronic cigarette products.