By Chino S. Leyco
The national government’s efficiency in collecting taxes accelerated to its highest level in two decades last year following the implementation of the Duterte administration’s first tax reform law.
According to the Bureau of the Treasury, the national government’s total tax collections as a percentage of the country’s economy, as measured by gross domestic product (GDP), settled at 14.7 percent in 2018, the highest in 20 years.
The treasury said the latest tax effort figure was also an improvement compared with 14.2 percent registered in the previous year.
However, the bureau also noted that the government failed to hit its tax effort ratio program of 15.4 percent after missing to hit its P2.677-trillion collection target.
The lower than expected tax collections is attributable to the below-target revenues from the tax reform for acceleration and inclusion act (TRAIN).
Earlier, the Department of Finance (DOF) reported that the TRAIN law generated a net revenue of P41.9 billion in January to September last year, below by 5.4 percent against the P44.3-billion target for the period.
Based on the DOF report, the sweetened beverage excise and the value-added tax (VAT) rationalization dragged down TRAIN revenues, while the additional sin taxes along with the new documentary stamp tax rates recorded above target collections.
Meanwhile, the government’s revenue effort also advanced to 16.4 percent from 15.6 percent a year ago, exceeding the programmed of 16.3 percent.
On Thursday, it was reported that the national government incurred a P558.26-billion fiscal gap in 2018, surpassing the P526.8-billion ceiling set by the Duterte administration’s economic managers last October by 5.9 percent.
The full year 2018 fiscal deficit is also higher by 59 percent compared with P350.64 billion registered in the previous year.
According to the treasury bureau, the government spent P3.408 trillion last year, exceeding by 1.8 percent the P3.346-trillion target for last year, while its total revenues marginally breached the P2.82 trillion goal for 2019 by one percent to P2.85 trillion.
Year-on-year, the expenditures increased by 20.7 percent from P2.823 trillion, while revenues jumped by 14 percent from P2.473 trillion.
In December alone, the Duterte administration incurred a budget deficit of P81.04 trillion after public spending amounted to P313.25 billion, while revenue collection reached P232.21 billion.