2013 tax effort projected at 13.4%
The national government’s efficiency in collecting taxes is seen to have settled at 13.4 percent last year due to better tax administration of the Bureau of Internal Revenue (BIR), data from the interagency Development Budget Coordinating Committee (DBCC).
The government’s tax effort, which is the ratio between the government’s tax collection and the country’s whole economy, as measured by gross domestic product (GDP), was seen to have improved by 0.6 basis points last year from 12.9 percent in 2012.
However, the emerging tax effort is for last year was slightly lower than the programmed 13.5 percent.
The BIR, responsible for almost 70 percent of the government’s annual revenue, is seen to have been more efficient in 2012 as the agency’s tax effort is seen to have exceeded the 10.5 percent target by 0.1 basis point to 10.6 percent.
The greater efficiency of the BIR was backed by the higher excise tax rates on so-called “sin products” and its stricter tax compliance monitoring that were implemented in 2013.
On the other hand, the Bureau of Customs, the government’s second largest revenue generating agency, is expected to have maintained its 2012 tax effort ratio of 2.7 percent for last year.
Customs tax effort, however, is below the 2.9 percent target set by President Aquino’s economic managers for 2013.
As September last year, the government’s actual tax effort stood at 13.65 percent, higher compared with 13.21 percent last year.
“Better tax administration was the key driver, plus the higher sin taxes,” Finance Undersecretary Gil S. Beltran said, noting Republic Act 10351 or the Sin Tax Reform Act of 2012 that sets higher levies on cigarette and alcoholic products contributed additional 0.3 percentage points to tax effort.
At end-September, the BIR, registered a 10.82 percent tax effort, while Customs posted a 2.71 percent efficiency.
Beltran noted that Customs’ weakening efficiency in collecting taxes was dragging the government’s tax effort for the past few years.
The DOF is aiming to raise the government’s tax effort to a record 16 percent before the end of the Aquino administration in 2016.