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Tax effort improves in H1 despite pandemic

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MORE Filipinos paid taxes in the first semester of this year despite the pandemic, according to the Department of Finance (DOF).

In an economic bulletin, the DOF said the tax effort improved by 0.55 percentage points to 14.74 percent. The DOF said this is closer to the 2019 first semester level of 14.86 percent.

DOF Undersecretary and Chief Economist Gil Beltran said in the full year of 2019, the tax effort peaked at 14.49 percent which is deemed the highest in 22 years.

“The country should continue to adopt fiscal reforms, particularly tax reforms still pending in Congress, to sustain these fiscal gains,” Beltran said in his economic bulletin.

“Due to fiscal reforms, the country was able to fund the unprecedented fiscal requirements imposed by the pandemic and, at the same time, protect its strong macroeconomic fundamentals,” he added.

Beltran noted that the increase in tax effort was mainly due to higher collections made by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

DOF data showed BIR collections increased 0.17 percentage points to 11.32 percent from 11.15 percent.

BOC collections, meanwhile, saw a 0.36-percentage point improvement to 3.31 percent in 2021 from 2.95 percent in 2020.

Tax reforms

“Tax collections improved partly due to tax reforms which include legislative measures and digitalization of revenue collections’ operations,” Beltran said.

Despite the improvement in tax effort, Beltran said the government’s total revenue dipped to 16.35 percent in the January to June period this year from the 16.94 percent recorded in the same period last year.

Beltran said non-current tax revenues last year were boosted by the nonrecurrent GOCC dividends collected under the Bayanihan 1 Act.

The DOF official also said the expenditure effort rose to 24.21 percent, the highest in the country’s history and 0.74 percentage point higher than the 23.47 percent recorded in 2019.

The NG deficit settled at 7.86 percent of GDP, higher than 6.53 percent deficit set last year, due to continuing Covid-related programs.

Read full article on BusinessMirror

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