OECD report: Philippines needs to sustain tax collections

CEBU, Philippines- While the Philippines has improved in increasing government revenues, it still has to make efforts to "further raise revenue on a sustainable basis," the Organization for Economic Cooperation and Development (OECD) said in a report.

“While significant improvements have been made to the tax administration in the recent past, tax yields remain constrained by a limited tax base, numerous exemptions and loopholes and evasion,” the OECD noted in its report entitled “Revenue Statistics in Asian Countries: Trends in Indonesia, Malaysia and the Philippines.”

The OECD said reforms and tax administration improvements in the Philippines have helped increase government revenues “to cut public debt and to improve fiscal stability.”

But the OECD also pointed out that historically, the country’s most tax reform efforts have been of limited success due to “lukewarm political support and opposition from vested interests in the bureaucracy.”

Factors relating to “political economy” have held back broader reform in the tax system, the OECD noted in the recently released report which is available on its website.

Despite these constraints, the global economic think tank cited that some tax reforms have been implemented by the Bureau of Internal Revenue (BIR) to facilitate taxpayers’ compliance and improve bureaucratic efficiency within the agency.

OECD said the major change in BIR came in 2000 when its Large Taxpayers Service (LTS) was created. LTS is headed by an assistant commissioner and is tasked to collect taxes from major taxpayers that account for a large share of total state revenues.

However, it pointed out that despite this reform, large companies remain “an underutilized revenue source.”

Other reforms made, OECD said, include the simplification of the tax system and online filing through the agency’s Electronic Filing and Payment System (eFPS). It added the BIR’s campaign against high-profile tax evaders and its Stop-Filer Program, which signals taxpayers that have filed in the past and then stopped, have helped address evasion and non-compliance.

“These and other initiatives have contributed to a 71% increase in the number of registered taxpayers in the Philippines in the six years between 2007 and 2013,” said the OECD.

“However, this increase in registration has not been accompanied by a similar increase in tax revenues,” it added. 

In an earlier interview, BIR Commissioner Kim Jacinto-Henares said the bureau is banking on tax transparency as key to generate more revenues.

Henares said transparency in taxation will make companies and other taxpayers that do not pay the correct amount of taxes accountable.

The revenue chief believed the country can do so much in generating more revenues internally.

More revenues, she said, are essential to fund the country’s development goals especially in infrastructure.  (FREEMAN)