Moody’s sees PH tax-to-GDP ratio improving to 16% in 2018
CREDIT rating agency Moody’s Investors Service forecasts that the Philippines’ tax revenue to gross domestic product (GDP) ratio will improve to 16 percent this year, helped in part by the increase in revenue base over the past five years.
“I think we are in a situation where revenue this year, we’re forecasting at over 16 percent of GDP,” Moody’s Investors Service Vice President and Senior Credit Officer Christian de Guzman said in a briefing on Thursday in Makati City.
The tax-to-GDP ratio reflects government revenues as a proportion to the size of the economy.
De Guzman said that in 2013, the Philippines had been the lowest revenue earner among its peers in the Association of Southeast Asian Nations (Asean) with a revenue-to-GDP ratio of only 13.5 percent.
“Revenue as a share to GDP was around 13.5 percent. It was very low and many know that even though the Philippines in the Asean context had the highest tax rates, it was still generating less revenue than other Asean peers,” he said.
With recent improvements in tax collection and administration, de Guzman said that the Philippines has emerged from being the lowest revenue earner to one of the most improved in terms of revenue base in the region.
“What we’ve seen in other countries in Asean, for example, over the same period of time is an erosion of revenues,” he said.
The Moody’s official cited Indonesia and Malaysia, which both reported a lower revenue base in the light of lower oil prices in the past year.
“That is why we see the Philippines not just outperforming but improving,” he said. MAYVELIN U. CARABALLO
The post Moody’s sees PH tax-to-GDP ratio improving to 16% in 2018 appeared first on The Manila Times Online.