The country’s tax effort, which measures and reflects the extent and capacity of the government’s tax collections, has always been low. For the period 1998-2017, our tax effort was at an average of 13.0%. This is low relative to the tax revenue performances of our ASEAN neighbors. Although tax effort for the first semester of 2018 improved to 15.2%, from 14.2% of the same period last year, we have yet to see if this trend will continue in the next period or the following years.
In a study, Dr. Rosario Manasan (2002) attributed the lackluster growth of the country’s tax effort to the problem of tax evasion, which includes the non-payment of taxes, and the act of reducing taxes by illegal means through the under-reporting of income, overstatement of expenses, use of fictitious receipts and sales invoice, and non-recording of sales, among others. Even though our law enforcement agencies led by the Bureau of Internal Revenue (BIR) continuously go after tax law violators by introducing programs such as Oplan Kandado and Run After Tax Evaders (RATE), there is still much to be done to curb tax evasion.
As a complementary measure to address this perennial problem, and as a solution to generate additional funds, the Duterte administration proposes a tax amnesty program, along with a series of tax reform packages.>>read complete document