Government tax collection effort drops by in January-September

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The government’s tax collection effort based on percentage of the country’s
gross domestic product (GDP) dropped by 0.4 percent to 14.5 percent in
January to September from 14.9 percent in the same period last year,
according to the Department of Finance (DOF).

An economic bulletin released over the weekend by the DOF attributed
the decline to lower collections by the Bureau of Internal Revenue (BIR),
Bureau of Customs (BOC), and other revenue-generating offices.

Collections by the BIR declined by 9.9 percent in the first nine months of
the year, while collections of other taxes and fees, like motor vehicle taxes
and forestry charges, went down by 27.6 percent.

On the other hand, the tax effort of the BOC dropped by 0.3 percent and
its collections declined by 15.3 percent.

In total, the taxes collected by the government in January to September
reached P1.85 trillion, or an 11.3-percent drop from a year ago.

However, nontax revenues, primarily higher dividend remittances and
repayment of interest and advances by government-owned and controlled
corporations, rose by 21.6 percent, which helped double the income of
the Bureau of Treasury (BTr)  to P201.6 billion also for January to
September.

“BTr income soared to P201.6 billion, almost twice the P118.6 billion
earned in the same period last year. BTr receipts benefited from robust
collections of dividend remittances on national government shares of
stocks, which compensated for the decline in the share in profits from
Pagcor”, the DOF said.

The increased nontax revenues was also attributed to the Bayanihan to
Heal as One Act giving President Rodrigo Duterte powers to reprogram,
reallocate and realign unutilized funds from government entities to finance
programs to counter the coronavirus disease 2019 (Covid-19) pandemic,
the DOF said.

“The fiscal reforms adopted by the Duterte administration, including tax
reforms and the utilization of idle savings in the public sector, boosted the
revenue effort to the highest first three quarters’ level in history. These
reforms have made the country one of the six strongest emerging
economies to meet the challenges of the pandemic,” the DOF said.

This translated to the overall revenue effort of the government increasing
by a measly 0.1-percentage point to 16.7 percent a 0.1-from 16.6 percent a
year ago.

The DOF said that to sustain the government’s revenue effort in the face of
the Covid-19 pandemic,  the various tax reform measures pending in
Congress be passed and enacted into laws soon.

“The country should continue to adopt fiscal reforms, particularly tax
reforms still pending in Congress to sustain these fiscal gains,” it added.

Among these is the Corporate Recovery and Tax Incentives for
Enterprises or CREATE bill, which seeks to lower the annual corporate tax
to 25 percent from the current 30 percent, and rationalize
incentives extended to companies operating in special economic zones.

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