RP spending hike a challenge with flat tax take

MANILA, Philippines - Tax collections for the past three years remained flat, making it difficult for the Philippines to increase spending to further stimulate the economy. For the past nine months, the country’s tax take reached an average of 14.71 percent of gross domestic product (GDP), a slight increase from 14.36 percent in 2007 and 14.68 percent in 2008, latest data from the Department of Finance (DOF) show. Besides lessening the country’s chances of hitting its growth targets, lower revenues indicate that very little has been achieved to improve collection despite the replacement of tax officials. In 2007, Bureau of Internal Revenue Commissioner Jose Mario Buñag was replaced by Lilian Hefti, an insider. In September, Sixto Esquivias, who earlier served the BIR, took over Hefti’s position. From January to September, the agency’s tax effort ratio dropped to 10.96 percent of GDP, lower than 10.97 percent a year ago, and 11.13 percent in 2006, DOF data said. Meanwhile, an opposite trend has been reported by the Bureau of Customs, the country’s second-largest revenue source, next to the BIR. Its tax ratio for the first three quarters reached 3.6 percent, higher than the 3.22 percent posted last year and 3.38 in 2006. - GMANews.TV