Govt tax collection in January up by 2%

source: abs-cbnnews

MANILA, Philippines - The government’s tax effort in relation to the country’s gross domestic product (GDP) increased in January mainly as a result of the good performance of the government’s two major tax-collecting agencies.

Finance Undersecretary Gil Beltran told reporters that in January the Aquino administration’s tax-collection effort reached 13.5 percent of the GDP, or an increase of 1.8 percent from the same period last year. The GDP is the sum of all goods and services produced in the country.

For January 2010, the Arroyo administration had registered a tax effort of 11.7 percent of GDP.

“Such tax effort in January [2011] is.01 percent shy of the total tax effort programmed for the entire year,” Beltran said.

Tax effort measures the government’s efficiency in collecting taxes and is computed by dividing collections to the country’s GDP.

The increase in the tax effort in January was compared to the GDP during the last eight quarters. It was mainly driven by good collection performance of the Bureau of Internal Revenue and Bureau of Customs, and the contribution of other government offices.

Beltran said that the increase in ratio can be sustained despite some setbacks such as the lowered projection of imports to 18 percent from the 27 percent registered during last year and the strengthening of the peso against the dollar in the months ahead.

The government is projecting a tax-effort ratio of 13.6 percent for the entire year, which was lower than last year’s target of 13.8 percent.

Data showed that last year, the BOC incurred substantial-revenue losses from various free-trade agreements that have taken effect such as the Japan-Philippine Partnership Agreement, which the government incurred losses of about P2.8 billion; Asean (Association of South East Asian Nations) Trade in Goods Agreement, P9 billion; and the reduction of tariff rate on oil, P5.1 billion.

Meanwhile, the BIR also has struggled to collect more as a result of the revenue-eroding measures passed by the previous administration. These include the Corporate Income Tax Rate Reduction (P5.8 billion in revenue losses), the Tourism Act (P6 billion), zero-tariff rate on oil (P5.1 billion), the establishment of the Bataan and Aurora freeport zones (P3 billion each), reduction of premium tax on life insurance to 2 percent (P1.3 billion), and the Documentary Stamp Tax Exemption on Secondary Trading (P1.4 billion).

For the year, the BIR is tasked to collect P940 billion while the BOC is expected to have P320 billion in collections.

The government’s economic managers aim to reach a tax effort of 15 percent before the end the Aquino administration’s term expires in 2016.

source: abs-cbnnews