BIR tax collection efficiency improves to 11.26% of GDP

The Bureau of Internal Revenue (BIR) said yesterday that its tax effort ratio reached double-digits last year on the back of the government’s main tax agency’s efficiency in collecting taxes.

BIR Commissioner Caesar R. Dulay said the ratio of the agency’s total revenue take as a percentage of the country’s economy stood at 11.26 percent last year, a significant improvement compared with its five-year average of 10.5 percent to 10.9 percent.

Along with higher tax effort, Dulay also said the BIR’s tax collection in 2017 was up by 12.92 percent, stronger than its five-year average growth rate of 9.31 percent to 9.71 percent.

“They say it was a pretty good collection year,” Dulay said at the Tax Management Association of the Philippines’ (TMAP) gathering yesterday. “Thanks to the cooperation of taxpayers.”

“We sought out the help of taxpayers and we’re very happy that they responded, that’s why the figures are there, we have a very good tax ratio and we have a good growth rate for 2017,” he added.

Tax effort is the ratio between government's tax collection and the country's whole economy, as measured by its GDP.

For this year, Dulay said he is optimistic that BIR’s tax effort would further improve this year following the enactment of the Duterte administration’s first Tax Reform for Acceleration and Inclusion (TRAN) law.

The government expects to raise R130 billion from TRAIN this year.

Last week, the BIR said that its tax take jumped 13 percent to R1.779 trillion last year but missed its target.

The BIR said its total 2017 collections exceeded the R1.576 trillion it collected in the previous year, but fell short of its R1.829-trillion goal for last year.

Earlier, the Duterte administration’s economic team raised the BIR’s collection target this year following the enactment of the first tax reform law.

The Department of Finance (DOF) now expects the government’s main tax agency to raise a record R2.039 trillion this year, higher by 1.7 percent compared with its original target of R2.005 trillion.

In July last year, President Rodrigo R. Duterte submitted to Congress his proposed national budget for this year and pegged BIR’s revenue collection at R2.005 trillion.

A BIR official, who declined to the identified because he is not authorized to speak with the media, said the new BIR collection target will depend on the final version of the first tax reform law, citing they expect additional revenues from the second phase of the recently enacted measure.

The DOF earlier said that Congress is expected to pass TRAIN 1-B in the first-quarter this year, which mainly composed of revenue enhancing measures.

Asked about the programs they plan to implement to meet the agency’s target this year, Dulay said they will intensify the BIR’s enforcement and push his people to “work more.”