Government prepares for more audits to boost tax collection

Finance Secretary Cesar Purisima said the government will step up efforts to run after tax cheats and conduct more audits to boost tax collection to a level equivalent to 4 percent of the country’s gross domestic product.

Purisima said in an economic briefing Tuesday that the government wants to maximize its revenue-collection potential so that it can fund more development projects and help accelerate growth of the economy.

The finance chief cited a World Bank study that showed that the government can collect more taxes to the tune of 4 percent of GDP if it will continue to improve tax administration and detect tax leaks.

“We are committed to improving our tax effort,” Purisima said, adding that the government is reluctant to impose new taxes.

Last year, the Bureau of Internal Revenue collected P924.15 billion in taxes, up by 12 percent from P822.62 billion the previous year.

The increase in tax collection was attributed to stricter tax audits and increased efforts to catch tax cheats and charge them before the courts.

The taxes collected last year, however, fell short of the government’s target of P940 billion by 16 percent.

The shortfall was blamed on the slowdown of the economy, which grew by 3.7 percent last year from the previous year’s 7.6 percent.

“The BIR collected more taxes last year (compared to taxes collected in 2010), and the BIR will collect more this year,” Purisima said.

For this year, the tax bureau is tasked to collect P1.066 trillion, which is seen helping keep the budget deficit below P279 billion.

This is higher than last year’s P198 billion, but finance officials believe it is within comfortable levels.

The government is willing to post a higher deficit to accelerate growth of the economy following last year’s slowdown, which was also blamed partly on underspending.

The economy, measured in terms of GDP, is targeted to grow by between 5 and 6 percent this year.—Michelle V. Remo