RP cuts tax take goal by P56 billion

MANILA – The government has slashed anew its tax collection goal this year as the economic crisis continues to take its toll on businesses and job creation, according to Finance Undersecretary Gil Beltran.

In line with the reduction in the country’s macroeconomic assumptions, Beltran said the Cabinet-level Development Budget Coordination Committee (DBCC) lowered the combined tax collection target of the Bureau of Internal Revenues (BIR) and the Bureau of Customs (BOC) to P1.071 trillion, down P56 billion from the previously revised P1.127 trillion.

This translates to a lower tax-to-GDP (gross domestic product) ratio of 13.8 percent compared to last year’s 14.1 percent. Originally, the Finance Department was eyeing to improve its tax collection effort to 14.3 percent of GDP this year.
Beltran said the BIR is expected to collect only P798.5 billion, down by P52 billion from the revised target of P850.5 billion this year.

This would result to a decline in the tax effort of the country’s main revenue-generating agency to 10.2 percent of GDP from 10.4 percent.

Beltran explained that the drastic slowdown in the economy this year would pull down BIR’s tax take by P28 billion while revenue-losing measures passed by Congress like the tax relief law and the removal of the franchise tax on transmission would forego another P24 billion.

Meanwhile, Beltran said the collection target of BOC was reduced by P4 billion to P273.3 billion from the revised goal of P277.3 billion, due to lower imports. This translates to a lower tax take of 2.9 percent of GDP from 3.5 percent of GDP last year.
After incurring a collection shortfall of P10 billion in the first four months of the year, he explained that rising oil prices is expected to yield an additional P6 billion loss for the BOC this year.
The DBCC has scaled down the country’s GDP growth target to a range of 0.8 percent to 1.8 percent from the revised range of 3.1 percent to 4.1 percent, following the dismal 0.4 percent growth in the first quarter of the year.
The budget deficit ceiling was also raised to P250 billion or 3.2 percent of GDP from the revised P199.2 billion or 2.5 percent of GDP due to government’s dwindling revenue collection and accelerated spending to keep the economy afloat.

The finance department has been pushing for several legislative measures including the rationalization of fiscal incentives, the simplification of net income taxation for self-employed and professionals, the simplification of the excise tax scheme for alcohol and tobacco products, and the removal of the BIR and BOC from salary standardization to increase the country’s tax effort.

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