Gov’t tax effort hits highest in decade to 14.25% of GDP » Manila Bulletin Business

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Gov’t tax effort hits highest in decade to 14.25% of GDP

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By Chino S. Leyco

The government’s efficiency in collecting taxes reached its highest level in a decade last year even without any new legislation introduced to prop up state revenues, the Department of Finance (DOF) said.

In a statement, Finance Undersecretary Gil S. Beltran said yesterday that the national government’s tax effort stood at 14.25 percent of the country’s economy, as measured by its Gross Domestic Product (GDP), last year.

The government’s tax effort improved from the previous year’s 13.75 percent, Beltran said.

“[The tax effort for 2017] is the highest tax effort increase over a period of 10 years,” Beltran said in his report to Finance Secretary Carlos G. Dominguez III. “This is without any new tax measure but purely from tax administration.”

Tax effort is the ratio between government’s tax collection and the country’s whole economy, as measured by its GDP.

Dominguez noted that besides registering the highest tax effort increase in 10 years, the DOF was also able to collect the highest dividends ever from government-owned and -controlled corporations (GOCCs) in 2017.

A separate report by Undersecretary Antonette C. Tionko, she said that dividends remitted by GOCCs amounted to an all-time high of P36.45 billion last year, up 30 percent from the previous year’s collections of P27.73 billion.

Dominguez noted that even if the Land Bank of the Philippines was not required to contribute dividends on its net earnings in 2017, remittances would reach P30.45 billion, still a remarkable improvement over the 2016 figures.

The Land Bank was allowed to do away with its dividend contributions to the national government in 2017 to give the bank sufficient leverage in its capital position to better serve the increasing developmental needs of the country.

In 2016, the Land Bank, with P6.6 billion in remittances to the national government, was the biggest dividend contributor among the GOCCs, making up almost 24 percent of the total dividend collections of P27.73 billion.

In 2017, even without Land Bank, dividend collections from GOCCs increased by 9.8 percent, which Dominguez had traced to the DOF’s efforts to aggressively promote financial discipline among GOCCs.

With Landbank’s dividends included in the computations, total GOCC remittances would be P36.45 billion, or a 29.8 percent hike from the 2016 collections.

Tionko said dividend collections totaling P30.45 billion last year came from 53 GOCCs, including the Civil Aviation Authority of the Philippines (CAAP), which had not remitted dividends for the past four years, but has now emerged as one of the biggest dividend contributors.

CAAP, which remitted a total of P5.39 billion to the Treasury, was able to collect nearly P6 billion from Philippine Airlines in October last year, after President Duterte ordered the Department of Transportation not to extend the deadline it had given to the flag carrier to pay its long-overdue navigational fees and other charges.

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