Gov’t sets higher 2013 tax effort goal

MANILA, Philippines – The Aquino government is aiming high. For 2013, the goal for tax effort, a measure of efficiency in tax administration efficiency vis-a-vis a growing economy, is set at 13.8% from the 13.3% target for 2012, latest data from the Finance department showed.

This higher target is likely meant to finally achieve investment grade status from global debt watchers, which, since 2010, have granted the Aquino government around 7 investment upgrades that reduce cost of the Philippines’ debts.

“To achieve these improvements, total revenues [in 2013] will have to grow by 14.1% from 2012. Total tax revenue is projected to grow by 15.7%, the BIR (Bureau of Internal Revenues) and [Bureau of] Customs are expected to post growths of 16.2% and 14.5%, respectively,” according to Finance Secretary Purisima.

The BIR and Customs are the largest sources of government revenues, and currently have a name-and-shame campaign to improve collections.

The BIR is tasked to collect roughly P1.2 trillion in 2013 against the P1.06-trillion target this 2012, while the BOC has a revenue goal of roughly P410 billion in 2013 versus the P357-billion goal this 2012. The economy, meanwhile, is projected to grow by 5% to 6% this year and 6% to 7% in 2013.

In 2011, the government’s the tax effort was at 12.3%, up from 12.1% in 2010.

Credit rating agencies have been pressing the government to improve its tax effort to 17%, the average among Asian countries. The last time the government’s tax effort hit 17% was in 1997 before the Asian financial crisis. – Rappler.com