BIR tasked to collect P2T by ’15 to fund projects

The Bureau of Internal Revenue is tasked to collect P2 trillion every year starting 2015, as the government is pressed to spend more on infrastructure and social services to combat poverty.

The Department of Finance, parent agency of the BIR, said boosting the annual tax collection to P2 trillion by next year would be quite a challenge, but said it was possible as the government addresses tax evasion across sectors.

The World Bank estimates that the government loses about P450 billion every year in potential revenues due to tax evasion.

BIR Commissioner Kim Henares said earlier that the tax bureau had been responding to the need to plug revenue leakages by auditing various sectors and chasing after more people and corporate entities suspected of tax evasion.

The BIR breached the P1-trillion collection mark in 2012, when its total annual tax collection reached P1.06 trillion.

Its collection grew further in 2013 to P1.217 trillion, which, however, fell below the official target for the year of P1.25 trillion.

The interagency Development Budget Coordination Committee (DBCC) sets the macroeconomic and fiscal targets of the government, including tax collection.

The DBCC has yet to decide on the official 2015 tax collection target of the BIR, although Purisima said a goal of at least P2 trillion would be appropriate.

Purisima cited the need to substantially boost spending on infrastructure and social services.

Public infrastructure spending in the Philippines currently stands at less than 3 percent of the country’s gross domestic product. The average in Southeast Asia is 5 percent.

The Aquino administration aims to boost public infrastructure spending to at least 5 percent of GDP by 2016.

The Philippines is also pressed to boost spending for social services given the country’s high poverty rate of 25.2 percent as of 2012.

The government aims to reduce this level to 18 to 20 percent by 2016, the end of Mr. Aquino’s term.

Purisima said that while tax collection has been growing at a robust pace, there was room to accelerate revenue growth.

Although the BIR already has filed over 200 tax evasion cases since 2010, Purisima said tax evasion remained rampant.

He said some business sectors that reported significant growth had not been registering commensurate increase in tax collection.

In the real property sector, for example, Purisima said construction grew by 11.1 percent last year but the sector’s aggregate tax payment contracted by 7.5 percent to P5.5 billion.