By Melissa Luz T. Lopez, Senior Reporter
TOTAL TAX collections in 2017 accounted for 14.3% of the Philippine economy to log the highest in over a decade, the country’s Finance chief said, which comes ahead of the implementation of tax reform.
Finance Secretary Carlos G. Dominguez III said total tax effort reached 14.3% of gross domestic product (GDP) last year, which is the highest in the last 11 years.
Mr. Dominguez said this posted a 0.6% increase from the previous year.
“This is the highest rate of improvement since 2009,” Mr. Dominguez said during the 2018 tax campaign kick-off of the Bureau of Internal Revenue (BIR) at the Philippine International Convention Center on Friday.
The BIR’s P1.779 trillion tax collections last year accounted for 11.26% of GDP. For 2018, the bureau is looking to collect P2.039 trillion revenues.
The agency’s 2017 collections accounted for 97.27% of its target and went up by 12.92% from a year earlier.
Mr. Dominguez said the BIR’s collection efforts will receive a boost from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act towards realizing its collection target.
“While we expect some revenue losses in reducing the income tax rate, we should be able to offset these losses with a whole new range of excise taxes,” he added, noting that this will make it easier for the BIR to calculate and collect taxes “more efficiently.”
The Cabinet official said the large taxpayers unit is expected to generate bulk of the revenues, “in light of the cascade of tax reforms.”
Signed on Dec. 19 by President Rodrigo R. Duterte as Republic Act No. 10963, the TRAIN reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.
Foregone revenues will be offset by the removal of some exemptions to value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; and new taxes for sugar-sweetened drinks and cosmetic enhancements.
The government is looking to collect P82.3 billion from the TRAIN law this year, which will support the Build, Build, Build initiative of the Duterte administration.