DOF Acknowledges Administration’s Tax Reform brought ₱575.8B Added Revenues in The Philippines

According to the Department of Finance (DOF), the administration’s comprehensive tax reform program brought an additional ₱575.8 billion in revenues from 2018 to 2021. However, the extended COVID-19 pandemic had shed three times more from government collections.

According to DOF’s annual report published on May 3, tax laws implemented since 2018 such as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, some of the tax amnesty programs, and the string of “sin” tax has contributed to a net of ₱68.4 billion in incremental revenues that year; ₱134.7 billion in 2019; ​​₱144 billion in 2020; and ₱228.6 billion in 2021.

DOF stated, “Incremental revenues from these measures are earmarked to fund the ‘Build, Build, Build’ and the universal health care (UHC) programs.”

From the year 2018-2021, higher taxes hit on consumption to compensate for the rationalized personal income tax rates under the TRAIN law generated P476.1 billion in additional collections.

On the other hand, The two tax amnesty programs on delinquencies and estate tax from 2019 to 2021 claimed a total of ₱14.6 billion.

The constant yearly increase in excise taxes slapped on cigarettes, e-cigarettes, and alcoholic drinks from 2020 to 2021 allowed the government to collect ₱85 billion from so-called sin products.

DOF expressed, “Excise taxes on sin products will continue to increase every year from 2022 onwards, as provided under the new sin tax laws, Republic Act (RA) Nos. 11346 and 11467.”

In addition, DOF noted, “It is also under this administration that excise taxes on sin products were increased three times. This administration is also the first to impose excise taxes on heated tobacco products and vapor products, with distinction between salt nicotine and freebase vapor products. These highlight what a galvanized political will and decisive action can do to protect the people from the consumption of products that are detrimental to their health.”

However, The DOF’s estimates show that the rough times caused by the pandemic resulted in a total of P1.71 trillion in foregone revenues since 2020.

DOF cited that when combined tax and non-tax revenue collections were measured as a share of gross domestic product (GDP), “the revenue effort of 15.6 percent over the five-year period since the Duterte administration took over in 2016 is the highest in over two decades.”

DOF expressed, “This feat was achieved despite the global economic downturn spanning almost two years because of the COVID-19 pandemic. Without the pandemic, the average revenue effort of the Duterte administration from 2017 to 2021 would have reached an estimated 16.2%.”

DOF added, “The highest average revenue effort of any administration was 16.4 percent, under then-President Ramos, due to proceeds from the administration’s thrust to privatize government assets.”

Moreover, DOF expressed, “Without the pandemic, the government under President Duterte would have exceeded the achievement of the Ramos administration and reached an even higher average tax effort of 14.8%.”

According to DOF, “The impressive tax effort in the first five years of the current administration has been attributed to the bold tax reforms and the aggressive digitalization and automation efforts of the revenue collecting agencies since President Duterte assumed office in 2016.”

The DOF report read, “The average tax effort under the Estrada administration was 12.7 percent. This fell to 12.1 percent under the Arroyo administration and went up to 12.7 percent during the Aquino III presidency.”