Finance Secretary Carlos Dominguez III has directed the Bureau of Internal Revenue (BIR) to zero-in on ways of properly collecting taxes from the succeeding tax reform packages that the Duterte administration will push in the Congress this year to further make the current system simpler, fairer and more efficient.
These next reform packages include reducing corporate income taxes complemented by the modernization of the fiscal incentives granted to businesses, which the BIR should study thoroughly on top of efficiently collecting the incremental revenues from the Tax Reform for Acceleration and Inclusion (TRAIN), Dominguez said.
He said the administrative adjustments that have to be made to ensure efficient collections from the TRAIN and the other tax reform packages rest in large part on the BIR’s Large Taxpayers Service (LTS), whose members are considered the “shock troops” of the entire bureau’s revenue efforts.
“This year, we expect to get the succeeding packages of the tax reform program through the legislative process. Included in these packages are the reductions in the corporate income tax rate which we expect to balance with the modernization of the many incentives given out to investors. This early, I hope the BIR will begin studying the ways and means to properly collect the taxes due under this new law,” said Dominguez at the launching of the BIR’s Tax Campaign Kickoff at the Philippine International Convention Center in Pasay City.
Dominguez also thanked the “hardworking people of the Bureau of Internal Revenue” for this agency’s successful campaign last year against cigarette manufacturer Mighty Corporation, which enabled it to hit over 97 percent of its revenue target in 2017 after it was able to collect a record amount of P30 billion from the firm.
“This is the largest settlement ever in the country’s history, which was the result of the intensified and coordinated drive by the BIR and the Bureau of Customs (BOC) against one of the biggest tax cheats in our history,” Dominguez said. “That settlement brought about a remarkable improvement in the collection of sin taxes. This is also a gift that keeps on giving.”
Dominguez also thanked the country’s taxpayers for helping the government attain high accomplishment rates on its revenue targets and assured them that the taxes they pay are well spent with Secretary Benjamin Diokno at the helm of the Department of Budget and Management.
“Of course, we also want to thank all the taxpayers here for your cooperation with our tax revenue agencies. Without you, they would not have been able to achieve this high rate towards their targets. So, thank you again, all of the taxpayers,” the finance chief said.
The Department of Finance (DOF) submitted last January to the House of Representatives the Package 2 of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), which covers reforms in corporate taxation and fiscal incentives. The other components of the CTRP, such as the removal of the value-added tax exemptions on coal and casino operations, and the reforms in property and capital income taxation, will be submitted within the year.
According to Dominguez, preliminary data show that the tax effort in 2017 registered at 14.3 percent, which is the highest in the last 11 years.
In the past administration, the tax effort increased by an average of 0.3 percentage points per year as compared to 2017’s 0.6 percentage points increase from the previous year, the highest rate of improvement since 2009, which Dominguez said was largely a result of a more efficient tax collection, as the TRAIN was not yet in effect last year.
“This year, we will attempt to continue and possibly even surpass these notable accomplishments through the old-fashioned way: through hard work,” Dominguez told BIR officials and employees.
Another piece of good news for the BIR last year, Dominguez said, was the approval of the TRAIN, which reduced personal income tax rates while adjusting rates for excise taxes on several products, among other offsetting measures.
“The Large Taxpayers Unit will be at the frontline of all the administrative adjustments the Bureau will have to make in the light of the cascade of tax reforms. Large taxpayers account for the major portion of our total revenue collections. The success or failure of our entire revenue effort rests mainly on the effectiveness of the Large Taxpayers Unit,” Dominguez said.
He said the officers manning the LTS should not see these new tasks as a burden but rather as a challenge. “This is the reason the best revenue officers have been handpicked to man this unit. You are the shock troops leading our entire revenue effort.”
Dominguez said the Tax Campaign Kickoff launched by the BIR was organized primarily to inform the bureau’s clients—the taxpayers—about the advantages of tax reform, such as simplifying the system to make tax compliance easier, along with the far-reaching benefits of raising more revenues to improve social services and modernize the country’s infrastructure, which would, in turn, attract more investments and provide jobs for the next generation of Filipinos.
“President Duterte’s unwavering political resolve to defeat corruption and bring about positive change makes our efforts all worthwhile,” Dominguez said.
He said the positive outcomes of this kind of “astute leadership of President Duterte are all visible” in the country’s newfound status as among the fastest-growing economies in the world, the high level of business and consumer optimism, and improving credit ratings.
“The next generation of Filipinos will inherit a more nurturing economy where they could explore the many opportunities open to them in building a vibrant future for them and their families,” Dominguez said.