RP may achieve 15% tax effort rate in two years

The Philippine government may achieve a higher tax effort — the measurement of the efficiency in collecting taxes from the top two revenue collectors — within the next two years and not by 2011 as earlier announced. At the end of the two year period, or by 2012, the tax effort of the collecting agencies is expected to increase by 15 percent, said Bureau of Internal Revenue (BIR) commissioner Kim Henares in an ambush interview Monday. President Benigno Aquino III has set even a more conservative target of achieving that 15 percent rate at the end of his six-year term. "Although President Aquino wants the government to raise the tax effort to 15 percent within his term until 2016, we have set an internal target of accomplishing that in the next two years," Henares told reporters. Finance Secretary Cesar Purisima earlier announced that he would want to achieve an increased tax effort rate as against the country’s gross domestic product (GDP) of 15 percent in the next 12 months. At present, the government's tax effort stands at 13.8 percent of GDP, which is far lower than the Asian average of 16 percent. The said ratio includes the performance of both the BIR and the Bureau of Customs, which together contributed about 95 percent of the government revenues. A percentage point of tax rate is equivalent to P80 billion. Purisima earlier said that the last time the national government has achieved a high tax effort rate was during the time of the Ramos administration at 17 percent. —JE/OMG, GMANews.TV