August 01, 2007

IMF: Better collection, not new taxes, is needed

By Daxim Lucas
Inquirer 08/01/2007

The Philippines may not need new taxes to shore up the state coffers, but the administration of President Gloria Macapagal-Arroyo needs to focus on improving revenue collections to ensure the sustainability of the country’s fiscal recovery, the head of the International Monetary Fund (IMF) said.

Speaking to business leaders in Makati City on Tuesday, IMF managing director Rodrigo de Rato stressed that improving tax efficiency was the key to preserving the government’s gains from the enactment of a law that expanded the scope raised the rate of the value-added tax (VAT) and helped to stave off a fiscal crisis.

“The Philippines needs no new taxes, but it needs more people to pay taxes,” he said. (More at IMF on taxes.)

Haven't we been saying this for the longest time? I always thought we didn't to raise the VAT to 12% and penalize the general public for what is largely, the Bureau of Internal Revenue's/government's inefficiency in collecting taxes. The problem is, we ordinary citizens keep on paying our taxes religiously, but most of the money ends up in the pockets of unscrupulous and corrupt government officials anyway. And those who don't pay their taxes aren't even being run after by the BIR. Guess why? To this day, the bureau still hasn't modernized its system – it actually doesn't have a master list of taxpayers in the country.

(The only thing I admire about BIR is its web site. You can download tax forms and read the country's tax laws.)

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