The collection performance of the Bureau of Internal Revenue (BIR) averaged 96.7 percent in its first two full years under the Duterte administration, compared to an average of only 94.5 percent during its full five years in the previous government.

BIR data submitted to the Department of Finance (DOF) show that the top revenue agency’s tax effort under the previous administration did not go beyond 11 percent, but rose to 11.27 percent in 2017 and 11.26 percent in 2018 under the leadership of President Duterte.

The BIR attained 97.35 percent (P1.78 trillion of P1.83 trillion) and 96.04 percent (P1.96 trillion of P2.04 trillion) of its collection target for 2017 and 2018, respectively, compared to only 86.12 percent (P1.44 trillion of P1.67 trillion) in 2015 with a tax effort of 10.82 percent.

This 2015 goal attainment was significantly lower than the previous year’s 91.65 percent (P1.33 trillion of P1.45 trillion), with the tax effort at 10.56 percent.

In 2013, the BIR performed better with a 97.05 percent (P1.22 trillion of P1.253 trillion) accomplishment of its target and a tax effort of 10.54 percent. It collected 99.23 percent (P1.06 trillion of P1.066 trillion) of its target in 2012, but with a tax effort of 10.02 percent and 98.31 percent (P924 billion of P940 billion) in 2011, with a tax effort of 9.52 percent.

Earlier, the Bureau of the Treasury (BTr) reported that BIR posted 13 percent year-on-year growth in the first quarter.

BIR’s total revenue for January to March 2019 amounted to P468.2 billion, an 11 percent or P45.1 billion increment over last year’s Q1 achievement, the national treasury said.

Tax reform has led to the strong performance of revenue collection agencies on the Duterte watch, with total revenues growing 15.2 percent from P2.473 trillion in 2017 to P2.850 trillion in 2018, the first year of implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Tax revenues grew 14 percent from 2017 to 2018—P2.250 trillion to P2.565 trillion. The 2018 tax effort of 14.7 percent of GDP is the highest in 20 years, according to Finance Secretary Carlos Dominguez III.

The country’s debt-to-GDP ratio, meanwhile, continued its downward trajectory under the Duterte administration despite its ambitious infrastructure buildup, with national government debt in relation to GDP at 42.1 percent in 2017, and falling further to 41.9 percent in 2018.

In a report released on April 30, S&P Global recognized the strengths of the Philippine economy that affirms the country’s creditworthiness. These include the tax reform program and higher revenue collections, which has enabled the government to finance President Duterte’s ambitious infrastructure modernization program dubbed “Build, Build, Build.”

S&P observed, “The Philippines has above-average economic growth, a healthy external position, and sustainable public finance.” The stable outlook on the rating, “reflects our view that the Philippine economy will maintain its momentum over the medium term, in combination with contained fiscal deficits and stable public indebtedness.”

The upgrade recognizes the implementation of vital policy and infrastructure reforms seen to fuel robust, sustainable, and more inclusive economic growth for the Philippines.

S&P said these initiatives include laws on tax reform, liberalization of the rice sector, and strengthening of the Bangko Sentral ng Pilipinas’ charter, and improving the ease of doing business.

Dominguez said “S&P Global’s credit rating upgrade for the Philippines by one notch higher to “BBB+” was an undeniable tribute to President Duterte’s unwavering commitment to bold reforms that are crucial to sustained and inclusive growth—and to his strong political will to get these tough initiatives done at the soonest.”

“To his credit, President Duterte has transcended all the political chatter and stayed focused on pursuing policy initiatives, such as tax reform, trade liberalization and infrastructure modernization, that are necessary to sustain the growth momentum, attract investments and ensure financial inclusion for all Filipinos on his watch,” Dominguez added.

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