DOF Undersecretary Antonette Tionko; DOF Undersecretary Mark Joven; BIR Commissioner Caesar Dulay; BOC Commissioner Leonardo Guerrero; Taxpayer Representative Marvin Galang; leaders of business groups; men and women of the BIR; distinguished guests; ladies and gentlemen.
Some of the oldest records of organized taxation date back to around 5,000 years ago from Egypt. In the time of Abraham, biblical text accounts that Pharaoh would send commissioners to take one-fifth of all grain harvests as tax. Whatever was earned went to funding grain warehouses, building projects, local armies, as well as feeding the people. Ancient as they were, these rules give testimony to the crucial role of taxation in building and maintaining societies and civilizations.
This is how important taxation is. Human societies cannot coherently survive without a governing state. These states, for their part, need revenues to perform their functions. Hence, all of these are connected – taxation, governance, and societal development.
We have seen this throughout our history. Revenue-short regimes usually back ineffective and poor governments. On the other hand, highly-developed states have robust tax collection. Because of their steady revenue flow, they can effectively plan and implement their programs. They can invest in human capital development. They can build large infrastructure projects. Most importantly, they create more economic opportunities for their people. Therefore, they are broadly supported and strongly trusted.
I mention all these things because it is tax season once again. The Bureau of Internal Revenue, the government’s main revenue agency, will send out its troops to meet the nation’s revenue needs.
Three years ago, the Duterte administration started its governance with a simple promise: real change for the Filipino people—a stronger economy, reduced poverty rate, higher infrastructure and social development spending, and better-quality government services. All these aim to provide a better, decent, and comfortable life for all law-abiding Filipinos.
Much like in history, our government cannot do this alone. We all have a part to play. On the one hand, the government has to collect sufficient revenues for its projects. On the other hand, the taxpaying public has the important duty of ensuring that our country moves forward through their prompt and correct payment of taxes.
Last year, as you heard, the BIR broke through the 2 trillion-peso-collection-mark, raising 2.18 trillion pesos in revenue. This is 11 percent more than the 2018 figure. As a result of this landmark collection, our tax effort, as you heard, improved to 15.1 percent of GDP, the best rate in 22 years.
This year, the Bureau’s task should be an easier one. The passage of several packages of tax reform such as the TRAIN Law, the Tax Amnesty Law, and recently signed into laws increasing excise taxes on alcohol, tobacco products and e-cigarettes, as well as the digitalization efforts of the Bureau and other administrative reforms have widened the base and simplified the process of tax collection.
Since we improved revenue collections and tax administration, the government has been able to invest more in modernizing the nation’s logistics backbone. In 2018, the public spending on infrastructure rose above 5 percent of GDP—the highest it has ever been and double the average infrastructure spending as a percentage of GDP for the last 50 years. Over the next two years, we plan on investing up to 7 percent of GDP in infrastructure. That will allow us to be at par with the more dynamic economies of the region.
Infrastructure investments and expanded social programs, as you know, are the drivers of our economic growth. With internally-driven growth, we expect GDP expansion this year to be between 6.5 to 7.5 percent despite slower global growth and other lingering external risks.
The rapid growth of the last three years, made possible by reliable revenue flows, brought down our poverty incidence from 23.3 percent in 2015 to just 16.6 percent in 2018. In three years, a total of 5.9 million Filipinos lifted themselves out of poverty. We are actually ahead of schedule in this regard. We are definitely on our way to over-performing on our self-imposed target of bringing down poverty incidence to 14 percent or lower by 2022 and eradicating extreme poverty in our country within one generation.
The same rapid expansion brought down unemployment levels to historic lows. The taxes enable us to fund free tertiary level education for our youth. Strong revenue flows from the sin taxes allowed us to fund the Universal Health Care program. We can do many more things with a strong and reliable revenue flow.
International credit rating agencies attest to our strong fiscal discipline by upgrading the Philippines’ risk ratings to BBB plus. This is the highest rating the country has ever achieved. Take note that we are not resting on our laurels. We are aspiring to gain an “A” level rating before President Rodrigo Duterte ends his term.
The rapid expansion of the last three years also brings the country to the threshold of an upper middle-income country, a feat we are looking to achieve this year.
All these are doable. The sustained strong performance of BIR will bring us there.
Clearly, the BIR is the spear point in our nation’s progress. So, as you go out there, building partnerships with our taxpayers in the framework of a dynamic modern tax system, remember that you are not just producing revenues. You are creating a better future for this country.
I trust that the Bureau will once more overshoot its targets with the able leadership of Commissioner Billy Dulay and the landmark reforms we are putting in place in how we do taxation. I also expect you to intensify your efforts against tax evaders, and widen the taxpayer base.
The BIR is gifted with talented professionals who know how to get the job done. I have great confidence in what the Bureau can deliver. Go forth and help us build this nation into one that our children and their children deserve. The nation is looking forward to the continued success of the Bureau of Internal Revenue!
Thank you very much.