Govt tax effort improves to 15.7% in Jan-Sept
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Fri, 08 Nov 2019 16:17:38 +0000
Tax collections by the government as a percentage of the country’s gross domestic product (GDP) improved in the first three quarters of 2019, the Department of Finance (DoF) reported on Friday.
“In the first three quarters of the year, tax effort topped 15.7 percent, already approaching the 15.8-percent water mark clocked in 1997,” it said in an economic bulletin.
The January-September 2019 tax effort was also a marked improvement from the 15.2 percent during the same period a year earlier.
Tax revenues grew by 10.30 percent in the nine months to September as collections of the Bureaus of Internal Revenue (BIR) and of Customs (BoC) rose by 10.98 percent and 8.15 percent, respectively.
In nominal terms, BIR collections reached P1.60 trillion, while BoC recorded P470 billion during the period.
With these, the Finance department said: “Fiscal policy will continue to be a pillar for high, sustainable and inclusive growth.”
The government earlier reported Philippine economic growth in the third-quarter of the year accelerated to 6.2 percent from the 5.6 percent and 5.5 percent in the first and second quarters, respectively.
These brought year-to-date GDP expansion to average 5.8 percent, still below the 6- to 7-percent downwardly revised target of the government this year.
“The modest rise in tax-to-GDP ratio for the period shows that, among others, households’ disposable income is intact from the high inflationary period of last year coming into the lows of this year, and where household consumption is still the main growth driver amidst steady employment levels,” Security Bank Corp. Assistant Vice President and economist Robert Dan Roces, meanwhile, told The Manila Times.
However, he noted the rate could probably be still below the average for the member countries of the Organization for Economic Cooperation and Development this year.
With this, Roces stressed the series of fiscal policy prescriptions or tax reform programs for implementation next year are seen to “close this gap as the economy grows further.”
Earlier, the DoF said it has set a timetable of 15 to 18 months to have the remaining packages of the government’s Comprehensive Tax Reform Program (CTRP) passed before the 2022 election season begins.
In his fourth State of the Nation Address last month, President Rodrigo Duterte urged the 18th Congress to pass the remaining CTRP packages, which he said would help finance efforts to reduce poverty in the country.
The remaining packages are:
• Package 1B, which seeks reforms in the motor vehicle users’ charge and the Bank Secrecy Law;
• Package 2, better known as Tax Reform for Attracting Better and Higher-quality Opportunities measure, aims to reduce corporate income taxes from 30 percent to 20 percent in 10 years and rationalize fiscal incentives;
• Package 2 Plus, which aims to further increase the excise tax on alcohol to provide additional funding for the government’s Universal Health Care program, and increase the state’s share from mining;
• Package 3, which would broaden the tax base of property taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions; and
• Package 4, which proposes the rationalization of capital income tax to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments.
The first package — Republic Act 10963 or the “Tax Reform for Acceleration and Inclusion Act” — was implemented in January 2018 after President Duterte signed it the month before. This law reduced personal income taxes in exchange for higher excise taxes on certain products, including automobiles, coal and sugar-sweetened beverages.