World Bank sees Customs modernization as tax-free way to boost gov’t revenue

The automation of the Bureau of Customs’ (BoC) processes is expected to raise government revenue without introducing new taxes. the World Bank said

The BoC launched on Friday the Philippine Customs Modernization Project, which hopes to bring the agency’s systems in line with international standards, while reducing the costs associated with trade.

“We expect this to reduce unregistered foreign trade and expand the country’s tax base and duty base. This will lead to an increase in the government revenue without implementing additional taxes,” Ndiame Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand, said during the virtual launch Friday.

Mr. Diop said Customs reforms implemented by other countries boosted their duty and tax collections by anywhere from 11% to 300%.

“The project will reform the way the Bureau of Customs operates, thereby enhancing its dual goals of revenue generation and trade facilitation,” Finance Secretary Carlos G. Dominguez III said in the same event.

The P5 billion project was partly financed by an $88-million loan from the World Bank, which was approved in October.

The automation of processes should increase accountability, dramatically reduce face-to-face interactions and reduce delays at the border, Mr. Diop said.

“The launching of this project is very timely. The pandemic has magnified the importance of modernizing our systems to thrive in the new digital economy. Now more than ever, we need more revenue to fund not only our COVID-19 response, but also our economic recovery program,” Finance Secretary Carlos G. Dominguez III said at the launch.

The project will be partially implemented by 2023 and enter full operations by 2024, Mr. Dominguez said.

Mr. Diop also said digitalization will improve the resiliency of Customs in trade facilitation, after the pandemic highlighted the bottlenecks that could result in shipping goods when borders are shut down.

Mr. Dominguez said a steering committee will be set up to further support the project’s implementation.

“When this project is done, we expect to see more efficient port operations, dramatic gains in reducing corruption in the agency, and a major increase in our trade volumes. The project will allow us to be at the cutting edge in the application of new technologies to achieve the best revenue performance. All these will support the sustainable and long term growth of our economy,” he said.

The BoC beat its collection target in February by 9.5%, after collecting P46.15 billion.

The BoC has been tasked to generate P620 billion in duties and taxes this year, up 15% from actual collections of P537.687 billion in 2020. — Beatrice M. Laforga