TRAIN brings tax effort to new record high in Q1
The government’s efficiency in collecting taxes reached a new record high in the first quarter of the year following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, its first tax reform law, in January this year, the Department of Finance (DOF) said.
Based on its latest economic bulletin, the finance department said the national government’s tax effort increased by 1.03 percentage point in January-March period this year to 14.47 percent from 13.44 percent in the same period last year.
According to the DOF, the first quarter tax effort, or ratio between the government’s tax collections and the country’s whole economy, was the highest ever achieved.
At end-March, tax revenues amounted to 1567.1 billion, up by 18 percent compared with 1479.9 billion in the same period last year.
Of that amount, the Bureau of Internal Revenue, the government’s main tax agency, raised 1423.1 billion, an increase of 14 percent from 1370.4 billion a year before.
The Bureau of Customs, on the other hand, collected 1129.8 billion, higher by 25 percent compared with 1104.1 billion in the previous year.
Taxes collected by other offices also accelerated by 162 percent to 114.2 billion from 15.1 billion last year.
Finance Undersecretary and Chief Economist Gil S. Beltran attributed the double-digit increases in the government’s two main tax agencies’ collections to the implementation of the TRAIN and improved tax administration. I’m wondering about the constitutionality of the ouster. Nonetheless, I don’t believe there will
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Meanwhile, the national government’s revenue collection as a percentage of the country’s gross domestic product (GDP) also improved, reaching 15.82 percent in the first-quarter from 14.91 percent a year before.
“NG revenues rose by 16.4 percent in the first quarter of 2018 as the first phase of TRAIN took effect, almost doubling nominal GDP growth which registered 9.7 percent during the quarter,” Beltran said.
Likewise, the government’s expenditure effort increased by 2.73 percentage points to 20 percent, the highest first quarter expenditure effort since 2003, thus boosting its contribution to GDP growth.
The national government’s budget deficit also settled at 4.1 percent of GDP in the first-quarter, as targeted, the DOF said.
Beltran said that the government’s fiscal space expanded by TRAIN 1 and tax administration enabled the Duterte administration to boost investments and growth in first quarter.
“Public construction expanded 25.1 percent, boosting GDP growth by 0.4 percentage point while government consumption rose 13.6 percent, contributing incremental 1.4 percent to growth,” Beltran said.
“Strong macroeconomic fundamentals backed by tax reforms and the build, build, build program will continue to boost economic growth to the optimum 7.0 percent to 8.0 percent level as the competitiveness of the economy rises and more jobs are created,” he added.