The tax bureau should look into the creation of a unit focused on high net worth individuals, a Cabinet official said, given the need to improve the government’s revenues.
“The high net worth individual taxpayers (HNIT) are still lagging behind in terms of nation-building, in terms of paying taxes. My proposal is for the BIR (Bureau of Internal Revenue) to create a high net worth large taxpayer group,” Finance Secretary Cesar Purisima said on Monday.
Purisima, who was speaking at the kick-off of a Large Taxpayers Service (LTS) campaign, cited the need for a more focused effort to expand the tax base.
Large taxpayers, he noted, account for about 62 percent of total revenue collections but only comprise about 2,000 companies.
“The LTS is doing a good job but I think we need to expand the base, because this country is not just made out of 2,000 companies. There are more than 2,000 companies and individuals that make this economy vibrant,” Purisima said.
“The challenge that I have for the BIR is to expand the LTS. Create a second tier, because it is important that we focus our efforts,” he added.
LTS employees, Purisima said, should be capable of handling the load given that each one is only handling four companies at most.
“The OECD (Organization for Economic Cooperation and Development) average is 1:13, so there is room to actually increase the coverage of the LTS group,” he said.
The BIR, Purisima said, while contributing significantly to government revenues, was still behind a target of 16 percent of gross domestic product (GDP).
“To date, BIR collections account for 13.6 percent of the GDP,” he said.
The BIR on Monday said the LTS collected P881 billion last year, a 6.97 percent increase from the P824 billion netted in 2014.
The LTS tally accounted for the bulk of total BIR collections, or 61.15 percent, covering 2,320 large taxpayers—1,236 regular large taxpayers and 522 excise large taxpayers.
Based on preliminary data, the BIR likely collected P1.45 trillion last year. The final figure will be released with the issuance of the 2015 cash operations report. In the first 11 months of 2015, BIR collected P1.327 trillion.
This year, the agency is tasked to collect P2.025 trillion, covering more than half of the 2016 national budget, with most expected to be come from income and value-added taxes.
Purisima said some sectors “underperformed” in terms of remitting taxes last year.
He cited the real estate industry in particular, saying: “Data from the National Economic and Development Authority showed that the sector expanded by 10 percent, but the tax collections (from the industry) went down by 12 percent.”