BIR sees substantial rise in collections

The Bureau of Internal Revenue saw a substantial rise in its collection of additional taxes from January to May this year.

Officials of the Department of Finance (DoF), head agency of the BIR, said this came about after the revenue agency instituted sweeping reforms in tax administration.

According to a DoF official, the government need not impose new taxes to increase revenue. It only had to enhance the manner of collecting taxes.

The Aquino administration is working hard to increase revenue by improving tax administration, Finance Secretary Cesar Purisima said.

A DoF study showed that after the BIR undertook administrative reforms, the revenue agency reported that it collected P27.55 billion in additional taxes from January to May this year—a significant increase from the collections made during the same period last year.

The study noted that the gain was the highest year-on-year additional tax collection through administrative reforms ever recorded.

Earlier, the DoF reported that the BIR collected P391.1 billion in taxes in the first five months of the year, up by nearly 47 percent from P344.1 billion in the same period a year ago.

The increase in tax collection was attributed to administrative measures, especially tighter audit of tax payments by individuals and enterprises.

For instance, Purisima said, the BIR was ordered to intensify its audit of self-employed individuals.

Purisima said that based on 2010 records, under-declaration of income seemed to be rampant in the self-employed sector. Income tax collected from self-employed individuals amounted to only P9.7 billion last year.

This means that the average annual income reported by self-employed traders was only P18,000, Purisima said, describing it to be an unreasonable figure.

Purisima said the BIR, under Commissioner Kim Henares, would intensify its audit of self-employed persons to raise the annual income declaration of the sector to an average of P350,000.

The BIR accounts for more than 60 percent of the government’s revenue.

The government is in the process of reducing the budget deficit. One official said that an improvement in the government’s fiscal position would be necessary to gain investor confidence.

Last year, the government reported that the budget deficit was P314 billion, equivalent to 3.7 percent of the country’s gross domestic product.

This year, the government hopes to trim the deficit to P300 billion, or 3.2 percent of GDP.