NextGen Day

MANILA, Philippines — According to data from the Department of Finance, personal income tax (PIT) collections as a percentage of GDP were highest under the Duterte administration, averaging 2.4 percent despite the lowering of rates for 99 percent of individual taxpayers starting in 2018 and the pandemic-induced economic slowdown (DOF).

The game-changing measures that President Rodrigo Duterte implemented under his Comprehensive Tax Reform Program (CTRP) since assuming office in 2016 have been credited with the impressive tax effort in the first five years of the current administration.

The DOF’s Domestic Finance Group (DFG) reported to Finance Secretary Carlos Dominguez III that the emerging PIT effort under Duterte from 2017 to 2021 was successful, despite the economy’s downturn in 2020 and 2021 due to strict mobility restrictions to contain the spread of coronavirus disease 2019. (Covid-19).

The significant PIT effort, according to DFG Assistant Secretary Valery Brion, is due to “improved compliance and an increase in registered taxpayers” following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law in 2018, which benefited practically all individual taxpayers.

During a recent DOF Executive Committee meeting, Brion stated, “The PIT reform under TRAIN made income taxation more equitable and a win-win for taxpayers, especially low-income workers.”

The DOF calculated an average PIT effort of 2.1 percent of GDP under the late President Benigno Aquino III’s administration (2011-2016), which was somewhat higher than the 1.9 percent average under both the Arroyo (2001-2010) and Ramos presidencies (1993-1998).

The 2.2 percent rate during President Joseph Estrada’s time came in second to the Duterte administration’s average PIT effort. The late President Corazon Aquino’s term had an average approval rating of 1.1 percent.

According to Brion, the current administration is also responsible for the greatest average value-added tax (VAT) effort since the tax was adopted in 1988, as well as the largest emerging excise tax effort since 1993.

Despite a substantial reduction in the CIT from 30 to 20 percent for micro, small, and medium enterprises (MSMEs) and to 25 percent for all other businesses beginning the pandemic year of 2020, the Duterte administration’s emerging average corporate income tax (CIT) effort covering the period of 2017 to 2021 is at 3.1 percent, second only to the Aquino III administration’s 3.4 percent.

The Philippines’ former CIT rate of 30% was the highest in the region, making the country less appealing to potential investors.

“Without the epidemic, CIT revenues could have hit 3.2 percent of GDP.” “The CIT continues to be the most important source of revenue for the Bureau of Internal Revenue (BIR), accounting for roughly 22% of overall tax revenues on average,” Brion added.

The average tax effort of the Duterte presidency of 2.2 percent roughly exceeds that of the prior administrations of Aquino III and Arroyo, and is also greater than the 1.8 percent during Estrada and the 2 percent under Ramos.

Without the epidemic, this ratio may have been higher at 2.3 percent, matching the highest average excise tax effort of 2.3 percent during the Corazon Aquino administration.

“The growth under the Duterte administration can be attributed to the successful passage of tax reform measures such as TRAIN and the two’sin’ tax reform bills. “The high excise tax effort was also aided by the gasoline marking program, which is one of TRAIN’s tax administration tools,” Brion stated.

TRAIN also imposed excise taxes on sweetened beverages and cosmetic procedures, as well as raising excise taxes on cigarettes, petroleum goods, coal, mining, and autos, according to her.

“As a result, the overall excise tax effort of the BIR and BOC (Bureau of Customs) increased to 2.1 percent in 2018 from 1.6 percent in 2017.” Furthermore, despite the fact that it was the first year of the pandemic, the installation of the two’sin’ tax rules in 2020 improved the excise tax effort to 2.4 percent from 2.3 percent in 2019, Brion noted.

The Duterte administration’s developing VAT average is at 4.11 percent, the highest since 1988, and could have risen to 4.36 percent if not for the pandemic-induced business shutdowns.

4.05 percent under Aquino III, 3.2 percent under Arroyo, 2.77 percent under Ramos, and 2.67 percent under Estrada are the next highest averages.

When the VAT was implemented under Executive Order (EO) No. 273 covering a limited range of goods and services during Corazon Aquino’s presidency, the VAT effort was 1.91 percent.

“Overall VAT collections by BIR and BOC account for almost a third of total tax revenues on average. “It’s BIR’s third-largest revenue stream, while it’s BOC’s highest,” Brion explained.

The DFG attributed the Duterte administration’s impressive VAT effort to the TRAIN law, which expanded the VAT base by removing 56 lines of VAT exemptions contained in several other laws; and improved tax administration, including ongoing digital reforms and the BOC’s enhanced valuation system, according to Brion.

Save/Share this story with QR CODE

---

Disclaimer

This article is for informational purposes only and does not constitute endorsement of any specific technologies or methodologies and financial advice or endorsement of any specific products or services.

📩 Need to get in touch?

📩 Feel free to Contact NextGenDay.com for comments, suggestions, reviews, or anything else.

---

We appreciate your reading. 😊Simple Ways To Say Thanks & Support Us:
1.) ❤️GIVE A TIP. Send a small donation thru Paypal😊❤️
Your DONATION will be used to fund and maintain NEXTGENDAY.com
Subscribers in the Philippines can make donations to mobile number 0917 906 3081, thru GCash.
3.) 🛒 BUY or SIGN UP to our AFFILIATE PARTNERS.
4.) 👍 Give this news article a THUMBS UP, and Leave a Comment (at Least Five Words).

---

AFFILIATE PARTNERS

World Class Nutritional Supplements - Buy Highest Quality Products, Purest Most Healthy Ingredients, Direct to your Door! Up to 90% OFF.
Join LiveGood Today - A company created to satisfy the world's most demanding leaders and entrepreneurs, with the best compensation plan today.

---