The government’s tax effort went up by 0.55 percentage point in the first semester as revenue-generating agencies recorded better collections versus the year ago level which had been affected by the initial implementation of pandemic-related lockdown measures.
The Department of Finance (DOF) said in a statement over the weekend the tax effort in the first half of the year rose to 14.74 percent from 14.19 percent in the same period last year, due to higher collections from the Bureaus of Internal Revenue (BIR) and Customs (BOC) as well as other offices.
“Fiscal reforms boosted the tax effort by 0.55 percentage point to 14.77 percent, moving close to the 2019 first semester level of 14.86 percent. In 2019, the tax effort peaked at 14.49 percent which is the highest in 22 years,” the DOF said in its economic bulletin.
“The country should continue to adopt fiscal reforms, particularly tax reforms still pending in congress, to sustain these fiscal gains. 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,” it added.
The DOF said the BIR tax effort rose to 11.32 percent, up by 0.17 percentage point from 11.15 percent a year ago.
BOC tax effort also went up to 3.31 percent from 2.95 percent, or an increase of 0.36 percentage point.
To recall, collections were hampered in the second quarter of 2020 due to the initial implementation of quarantine measures which were also at their strictest level, amid the coronavirus disease 2019 (COVID-19) pandemic.
“Tax collections improved partly due to tax reforms which include legislative measures and digitalization of revenue collections’ operations,” the DOF said.
Meanwhile, the revenue effort dipped by 0.59 percentage point to 16.35 percent from 16.94 percent in the first semester last year.
“Last year, non-current tax revenues were boosted by the nonrecurrent government-owned and -controlled corporations dividends collected under the Bayanihan 1 Act to help combat the effects of the pandemic,” the DOF said.
The DOF also reported that the expenditure effort rose to 24.21 percent in the first half of the year, the highest in the country’s history and 0.74 percentage point higher than the 23.47 percent recorded in the same period a year ago.
“The national government deficit settled at 7.86 percent of gross domestic product, higher than 6.53 percent deficit set last year, due to continuing COVID-19-related programs,” the DOF said. – Angela Celis
