On Tuesday happened a momentous event in our country’s history as President Duterte finally signed into law, the 2018 General Appropriations Act, or the 2018 national budget, and the first ever tax reform, also known as, the Tax Reform for Acceleration and Inclusion.
With the 2018 national budget worth P3.7 trillion approved, the Duterte administration is now ready to get the ball rolling for next year. Furthermore, TRAIN’s passage means having additional source of revenue to finance the administration’s programs, particularly the Build Build Build infrastructure development program. The tax reform will generate P130 billion in additional government revenues.
One of the key provisions of the tax reform is the personal income tax exemption of workers earning P250,000 and below a year. With this, minimum wage earners will benefit from the use of their full earnings. The tax exemption for 13th month pay and other bonuses was also raised to P90,000. With the implementation of TRAIN, about 6.8 million out of the country’s 7.5-million individual income taxpayers will be tax-exempt.
To compensate for the loss due to the broadening of the value-added tax base and increasing personal income tax exemptions, excise taxes of several goods, such as fuel and automobiles were raised. The tax on tobacco products was also raised from P30 per pack to P32.50. A much higher increase on sin taxes has been proposed by the Department of Finance, which will be submitted as part of the second package of the tax reform to Congress early next year.
While the tax reform if promising, its effectiveness will still depend on the collection efficiency of the Bureau of Internal Revenue and the Bureau of Customs. BoC’s target collection for 2017 is P468 billion; but as of November 2017, it has only collected P390 billion. On the other hand, BIR’s target collection for 2017 is P1.829 trillion, but has only collected P1.306 trillion as of September 2017.
The BIR and BoC under the previous administration have an unpleasant practice of adjusting their collection targets halfway through the year when there’s a shortfall or when they feel that they cannot reach their respective targets before the fiscal year ends. This is a sign of collection of inefficiency. Hence, I propose that all collection ports of the BOC and all Revenue District Offices of the BIR be given collection targets quarterly and be required to report them regularly.
I am also looking forward to the promise of DOF Secretary Sonny Dominguez to strictly implement the Lateral Attrition Law by 2018, to help improve the government’s collection efficiency. It is about time that we reward government officials and staff who perform well in tax collection and penalize those who are underperforming.
The Development Budget Coordination Committee projected a collection of P637.1 billion for the BoC and P2.005 trillion for the BIR, including the additional revenues from the implementation of TRAIN on 2018. Should these collection agencies meet, or even exceed their targets, the fruition of the government’s ambitious plans and programs for 2018 will be possible. A better Philippines is finally within reach.