ASEAN KEY DESTINATIONS
Collecting taxes-a Philippine priority
The Aquino administration’s 2011 spending plan hinges on improvements in the collection efficiency of its two main revenue-generating agencies, according to the Department of Finance (DOF).Data from the DOF showed that the Bureaus of Internal Revenue (BIR) and of Customs (BOC) have to increase their tax effort to 14.1 percent from last year’s 13.8 percent to fully fund the government’s P1.645-trillion budget for this year.
The BIR is tasked to collect P940 billion for this year, while the BOC has to raise P320 billion.
The tax effort measures the government’s efficiency in collecting taxes, and is the share of tax collections to gross domestic product (GDP), which is the amount of final goods and services produced in the country.
Finance Undersecretary Gil Beltran expressed concern over the tax breaks enjoyed by sectors driving the country’s economic growth, raising worries that the BIR and the BOC may be unable to hit their collection targets.
Another hurdle facing the Aquino administration is the scheduled reduction in import duties to near zero.
Data showed that the BOC incurred substantial revenue losses from various free trade agreements, including P2.8 billion arising from the Philippine-Japan Partnership Agreement, P9 billion from the Asean Trade in Goods Agreement (ATIGA), and P5.1 billion from the zero tariff on oil.
The BIR’s collection performance likewise was dented by laws that gave out fiscal incentives to individual and corporate taxpayers, including P5.8 billion from the corporate income tax rate reduction, P6 billion from the Tourism Act, P5.1 billion from the zero tariff on oil, P6 billion from the establishment of the Bataan and Aurora Freeport zones, P1.3 billion from the reduction of premium tax on life insurance to 2 percent, and P1.4 billion from the documentary stamp tax exemption on secondary trading.
“It is notable that despite the higher tax exemptions, the revenue agencies have managed to increase tax efforts,” Beltran said.
He said all Asean member countries’ tax efforts have gone down because of the ATIGA and other investor perks.
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