TAX COLLECTION ISSUES

AND
RECOMMENDED SOLUTIONS

Submitted to: Atty. Edison James F. Pagalilauan

Submitted by: John Gabriel D. Palanog
Palanog, John Gabriel D.
2021-0240 2

TABLE OF CONTENTS

Introduction 3
Problem and Issues 4
Recommendations 5
References 6
Palanog, John Gabriel D.
2021-0240 3

INTRODUCTION

Taxes are the lifeblood of a state. Revenue derived from tax is

what gives the government the ability to function and care for its
people, without it the state and its government would surely cease
to exist, hence the proper and efficient collection of tax is
paramount. A study conducted by the National Tax Research Center
on Revenue and Tax Effort Analysis in ASEAN Countries from 2010
to 2019 shows that the Philippine national government revenue has
consistently increased during the aforementioned years, averaging
2.04 trillion pesos.1 Last year alone, the Bureau of Internal Revenue
announced that they have surpassed its 2.1 trillion revenue goal by
more than 500 billion pesos and now the Bureau has a collection
goal of 2.6 trillion pesos for the year 2023. 2 One of the contributors
to a consistent rise of revenue is the addition of digital payments. In
another study published by the National Tax Research Center titled
“The Role of Payment Systems in Philippine Tax Administration”
shows that the Bank Debit System, Electronic Filing Payment System,
PESOnet, and Mobile payment through PayMaya and Gcash, that was
adopted by the Bureau in the past years, contributed to the rise of
collected tax revenue.3 In the same study, they stated that payment
of taxes through digital means amounted to 30% of total monthly
volume of tax payments and in terms of value, 160.8 billion pesos of
the 179.6 billion total monthly collection was paid through digital
payment.4 While it looks like tax collection in the Philippines is all
well and good, there are still underlying issues that need to be

1
NTRC Tax Research Journal Vol. XXXIII.6 November-December 2021
2
BIR's P2.6-T collection goal achievable: authorities | Philippine News Agency (pna.gov.ph)
3
NTRC Tax Research Journal Vol. XXXII.4 July-August 2020
4
Id.
Palanog, John Gabriel D.
2021-0240 4

resolved in order to increase the efficiency of tax collection in this

country.

PROBLEM AND ISSUES

● Corruption
Corruption in the Bureau of Internal Revenue is well
known to almost anyone in the Philippines. Charges of
bribery, extortion, and smuggling are charges commonly
filed against corrupt employees of the Bureau. Corruption
in general also affects tax collection, that is why the
phrase “Bakit pa ako mag babayad ng tax e kukurakutin
lang din naman?”. A study conducted by the International
Monetary Fund states that when taxpayers believe that
their government is corrupt, they are more likely to evade
paying taxes.5

● Uninformed taxpayers
Taxpayers during the month of April are always confused
on how to pay their taxes, especially those who are first
time payers.

● Online Freelancers
In the advent of a more connected world, freelancers who
work in the Philippines but their income are derived from
outside sources are required to pay their share in taxes,
however, many of these freelancers are unwilling to pay
their tax and the Bureau of Internal Revenue has no

5
Corruption and Your Money (imf.org)
Palanog, John Gabriel D.
2021-0240 5

resources to monitor each and everyone who works in the

Philippines but with income derived from outside source.
Collecting taxes from online freelancers is a tricky
problem since they do not register themselves in order
not to get caught not paying taxes. The Bureau of Internal
Revenue also does not have enough manpower and
resources to track and investigate any suspected tax
evader especially in cyberspace.

RECOMMENDATIONS

● On Corruption
While there is no quick fix to corruption, the Government
can always keep on fighting against it. Continuous
persecution of corrupt government officials and
employees and encouraging whistle blowing and citizen
reports on corruption can go a long way in lessening, if
not totally eradicating, corruption. There is no
wunderwaffe in fighting corruption, therefore consistency
in fighting it must be maintained.

● On uninformed taxpayers
While a Citizen’s charter is always posted in the offices of
the Bureau of Internal Revenue, the bureau should still
engage on information drives and campaigns all year
round to inform citizens on what and where to file certain
documents and an accessible way to know how much they
owe the government. An information drive whenever tax
season is not enough, an information campaign
Palanog, John Gabriel D.
2021-0240 6

throughout the year should be done in order to not only

let the people familiarize themselves on the process of tax
payment but also on the laws and regulations that may be
helpful to them.

● On online freelancers
The National Government must help the Bureau of
Internal Revenue in order to collect taxes from the online
freelancers. Increased budget must be given to the Bureau
of Internal Revenue in order for it to hire a competent
workforce to track online freelancers in cyberspace and
tax examiners to check if these online freelancers are
paying their taxes. Coordination with various government
agencies such as the Anti-Money Laundering Unit in
tracking incoming money from foreign sources.

REFERENCES
NTRC Tax Research Journal Vol. XXXIII.6 November-December 2021
BIR's P2.6-T collection goal achievable: authorities | Philippine News Agency (pna.gov.ph)
NTRC Tax Research Journal Vol. XXXII.4 July-August 2020
Corruption and Your Money (imf.org