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Tax effort best in two decades amid crackdown on tax evasion, smuggling

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Department of Finance (DoF)

FINANCE SECRETARY Carlos G. Dominguez III said tax revenue as a share of the economy in 2019 rose to 15.1% from 14.7% a year earlier, which he called the highest rate in over two decades.

In a speech Thursday, Mr. Dominguez said the indicator, which is known as “tax effort,” was ”the best we have achieved in 22 years.”

He said the Department of Finance (DoF) expects tax effort to improve further this year due to better tax administration and a continuing crackdown on smuggling.

“We expect the tax effort to be further reinforced this year from the better tax administration and intensified anti-smuggling drive of the government; the passage of the remaining tax reform packages; the increased dividend remittances from government-owned and controlled corporations; and a sustained campaign to crack down on errant Philippine Offshore Gaming Operators (POGO) and their service providers,” he added.

Collections from the POGO sector last year totalled P6.42 billion, up 169%.

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“We expect to collect significantly more this year as we properly document and audit operations of these service providers,” he said.

The two largest tax-collecting agencies, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC), collected a total of P2.33 trillion in taxes and duties last year, up 10.67% but 6% below target.

Finance Undersecretary and Chief Economist Gil S. Beltran said tax reform is also helping maintaining a “prudent economic policy,” under which enabled the economy is growing faster than the rate it takes on new debt.

On Wednesday, the Bureau of the Treasury (BTr) reported that the share of debt to Gross Domestic Product (GDP) continued to improve to 41.5% in 2019 from 41.8% in 2018, even though the stock of outstanding debt rose during year.

“Debt management has been very effective in minimizing the debt burden despite rising interest rates,” Mr. Beltran added. — Beatrice M. Laforga

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