State tax effort slips in first 3 months

THE government’s tax collections as a percentage of the country’s gross domestic product (GDP) dropped in the first quarter of the year, the Department of Finance (DoF) reported on wednesday.

In an economic bulletin, the Finance department said the government’s tax effort eased by 0.05 percent to 13.88 percent from 13.93 percent in the same period last year.

It attributed the decline to smaller collections from other

offices and to the Bureau of Internal Revenue’s ( BIR) lower tax effort of 10.48 percent “due to reversals in the production of excisable goods.”

BIR collections rose by only 0.1 percent in January to March as manufacturing production decreased by 3.6 percent in the period “due to the Taal Volcano eruption [ on January 12] and the coronavirus [ disease 2019 (Covid-19)] crisis, both of which DENTED PRODUCTION OF REfiNED PEtroleum products by a hefty 35.5 percent and tobacco manufactures by 28.6 percent, both major sources of BIR tax collections,” the DoF said.

Other taxes, which include motor vehicle taxes and forestry charges, expanded by 12.9 percent despite the implementation of the enhanced community quarantine in the latter part of the quarter to curb the spread of

Covid-19 in the country.

The Bureau of Customs (BoC) made up for the slack, increasing its tax effort to 3.25 percent, while its collections jumped by 2.4 percent year-on-year.

These resulted in P687.7 billion in tax revenues in the period, which is 0.8 percent wider from a year ago. However, the DoF emphasized that the year-on-year growth was below the nominal GDP growth of 1.1 percent.

Nontax revenues climbed by 39.6 percent, due primarily to Treasury income soaring to P77.0 billion in March from P12.0 billion in the

same period in 2019.

“This is also due to robust collections of dividend remittances on national government shares of stocks, and share in the profits of GOCCs ( governmentowned and - controlled corporations),” the department explained.

“The Bayanihan to Heal as One Act” — formally known as Republic Act 11469 — “also empowered the President to reprogram, reallocate and realign unutilized funds from government entities to finance programs to counter the Covid-19 pandemic,” it said.

These resulted in the 12.7-percent expansion in overall revENUES IN THE fiRST QUARTER, OUTstripping

nominal GDP growth, which registered 1.1 percent in the same period.

It translated to a higher revenue effort of 17.33 percent in THE fiRST THREE MONTHS, A 1.78-PERcentage-point improvement from 15.55 percent a year ago.

“The fiscal reforms adopted by the Duterte administration, including tax reforms and the utilization of savings in the public sector, boosted the revenue effort to the highest first- quarter finish in history,” the DoF said.

‘The country should continue TO ADOPT fiSCAL REFORMS, PARTICUlarly tax reforms still pending in CONGRESS TO SUSTAIN THESE fiSCAL gains,” it added.