TRAIN, better admin improve gov’t H1 tax effort

By Chino S. Leyco

The national government’s efficiency in collecting taxes improved in the first semester of the year following the implementation of the first tax reform law along with the improvements in revenue collections, the Department of Finance (DOF) said.

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Based on the DOF’s latest economic bulletin released over the weekend, the government’s tax effort improved by 1.01 percentage point in January to June this year to 15.23 percent from 14.22 percent in the same period in 2017.

The DOF noted that almost a half or 0.4 percentage point of the rise was due to the tax reform for acceleration and inclusion law (TRAIN) and the rest or 0.61 percentage point was to tax administration improvements.

At end-June, the Bureau of Internal Revenue (BIR), the government’s main tax agency, registered an 11.71 percent tax effort, an increase compared with 11.28 percent in the previous year.

Likewise, the Bureau of Customs posted an improvement in its tax efficiency by registering 3.39 percent from 2.8 percent a year before.

The tax effort of other collecting agencies, including the Bureau of the Treasury, meanwhile, registered a slight decline to 0.13 percent from 0.14 percent in the first six-months last year.

Tax effort is the ratio between government's tax collection and the country's whole economy, as measured by its gross domestic product (GDP).

The national government’s revenues in the first semester rose by 19.9 percent to P1.410 trillion from P1.176 trillion in the same period last year as the first phase of TRAIN took effect.

During the period, BIR collections accelerated by 13.7 percent, while Customs collections grew by 32.9 percent, both exceeding the nominal GDP growth.

Likewise, non-tax revenues rose by 45.1 percent due to higher collections of dividend remittances on national government shares of stocks, guarantee fees, and share in the profit of the Philippine Amusement and Gaming Corp.

Higher collections from other offices also contributed to the increase, which included the one-off transfer of P13.5 billion in bond proceeds from the United Coconut Planters Bank (UCPB) for the Coconut Industry Investment Fund.

Excluding the transfer, this would still show improved collection from other offices.

For this year, the national government’s revenue effort increased by 1.47 percentage point to 17.12 percent, the highest ever achieved during the first semester.