No new taxes in Philippines in 2013

MANILA, Philippines – The Aquino administration seems to be keeping its campaign promise of no-new-taxes 3 years into President Benigno Aquino III’s term.  

Based on the latest 2013 budget program prepared by the inter-agency Development Budget Coordination Committee (DBCC), no new tax measure will be pushed in 2013 as the government pins its hopes for more revenues from more efficient tax collections and two reform bills.

This confirms consistent expression of confidence by the economic team and President Aquino himself that two revenue reform measures — the sin tax bill and rationalization of fiscal incentives — will be passed this 2012.

The sin tax bill, which seeks to increase excise or specific tax on “sin” products, like tobacco and alcohol, has made it through the first legislative hurdle last June after the House of Representatives passed it. The reform bill aims to raise at least P30 billion additional taxes per year.

Both the sin tax and fiscal incentives bills are now pending at the Senate.

Tax administration

Both bills, however, are meant to complement the promised effort of the government to improve revenue collection efficiency and plug leaks in the tax administration.

Finance Secretary Cesar Purisima, a key figure in the 2010 elections that Aquino’s Liberal Party won, has said that he would rather put in place good governance efforts with longer-lasting impact, like the ongoing name-and-shame campaign.

The Bureau of Internal Revenue (BI) has the Run After Tax Evaders Program, while the Bureau of Customs (BoC) is implementing the Run After The Smugglers Program. The government is also intensifying its Revenue Integrity Protection Service, the anti-corruption unit of the Department of Finance, by filing more cases against corrupt officials of the government’s fiscal agencies and bureaus.

Over a hundred cases have been filed against reportedly erring taxpayers and traders to send the message that the government means business.

Fiscal performance

In the first 6 months of 2012, the revenue collection agencies have performed as follows: 

• BIR collected P521.159 billion, below the P535.357 billion target; BIR has to collect P1.066 trillion for entire 2012
• BOC raised P143.425 billion, below the P167.175 billion target; BOC has to collect the revised P347-billion target for entire 2012
• Privatization of state assets expected to raise P2 billion

Budget deficit is expected to hit P279.1 billion at end-2012, given the programmed spending of P1.839 trillion this year.

For 2013, the government has set a national budget of P2.006 trillion. Of this, revenue collections target is set at P1.78 trillion.

The target revenue is expected to be contributed by:

• BIR target: P1.238 trillion
• BOC target: P397.3 billion
• Privatization of state assets expected to raise P2 billion

The target for budget deficit for 2013 is P241 billion, given a P2.021 trillion programmed spending next year.

Given the relatively healthy fiscal position of the government, the Aquino administration hopes to clinch the long-awaited investment grade status from international ratings agencies.

The Philippines is currently a notch below investment grade status, which would make borrowings cheaper. – Rappler.com