President Rodrigo Roa Duterte; Commissioner Cesar R. Dulay; Deputy Commissioners and Directors of the Bureau of Internal Revenue; Mr. Lance Gokongwei; dear taxpayers and friends:
Thank you for inviting me to this tax campaign kick-off ceremony of the Large Taxpayers Service (LTS).
As you know, we are engaged in convincing our legislators to pass in our tax system a new tax reform program. These reforms include both a reduction in income tax rates charged to individuals and corporations as well as introduce new revenue instruments that will bring up the aggregate revenue. The additional revenue from these new tax measures is indispensable to building the infrastructure that our economy needs to maintain a robustgrowth. It is key to achieving and sustaining the 7% GDP growth rate we have programmed. This growth rate, in turn, is a necessary condition to bring down the poverty rate to 14% by the end of the Duterte Administration.
Those opposing the tax reform program argue that we should focus on improving the tax effort instead of introducing new revenue measures. There is no argument about improving the efficiency of tax collection. We have, in fact, improved collection dramatically the past few months. However, we need to convince our legislators that we need to reform our tax policies to further improve collection efficiency. Our taxes should be rendered simpler and fairer to generate the volume of revenues necessary to push our economic program forward.
The LTS has been exemplary in this regard. For the first 9 months of 2016, the LTS raised its collection to P891.23 billion. That represents an improvement of 9.41% over the same period for the preceding year. For this,LTS has set an ambitious collection goal of P1.152 trillion. This is the equivalent of 63% of the total BIR target of P1.829 billion…sorry, trillion.
Since its creation in November of 1999 through Executive Order 175, the LTS provided the lion’s share of BIR collections. This is exemplary, considering that the LTS is manned by only 564 highly qualified and dedicated personnel.
As of 2016, there are 2,320 large active taxpayers registered with the LTS. These registered large taxpayers account for 61% of total BIR collections.
I find the number of registered large taxpayers rather small, considering the rapid expansion of our economy. The first task of the LTS, I suppose, is to seriously review and update the registry of large taxpayers. If we are able to significantly add to the number of large taxpayers supervised by the LTS, I am sure that we can increase the tax effort equally significantly.
Many of our large taxpayers are represented in this ceremony. I am almost sure all of them will agree that the number of registered large taxpayers is too small. Whatever the criteria for qualifying large taxpayers may be, I am sure that many who should be in this registry have managed to stay out of it.
My marching orders are to go out and find the other large taxpayers who have managed to avoid the registry. Those potential large taxpayers will enable us to better meet our collection targets and demonstrate not only significant but substantial improvements in our tax effort.
In closing, let me congratulate the entire BIR for improving collections over the past few months. True, we have made the targets realistic rather than aspirational. Nevertheless, the collections have surpassed previous performance in a significant manner.
In fact, for the first month of this year, they have collected over 15% more than they did in the first month of 2016. So let’s give them a big hand.
Keep it up. We have both a historic and patriotic duty to fulfill. The entire strategy of this government to substantially address our country’s infrastructure backlog and prepare young Filipinos with the skills to be competitive in the coming years will fail if we are not able to raise the revenues required to do the basic things.
The strategy involves sustaining a growth rate of 7% or better this year onwards. Achieving that rate requires raising public investments in infra to 5% of our GDP. By 2022, if the strategy is pursued, we should be able to bring down our rates of extreme poverty from 22% to 14%.
We, whose responsibility is to produce that revenue stream to fund this strategy, play a key role in our people’s economic success. I trust we will all deliver and deliver well.
Thank you and good day.