Government revenues from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law exceeded target by 6.8 percent in the first semester with major gains seen in the collection of personal income tax, petroleum excise tax, sweetened beverage excise tax, tobacco excise tax and documentary stamp tax.
Documents sent by the Department of Finance (DOF) to reporters showed that based on preliminary data, TRAIN revenues reached P55.6 billion in the first half of 2019, P3.5 billion higher than the target of P52.1 billion.
“The reported revenue is about half or 49.2 percent of the P113.1 billion full year TRAIN target,” the DOF said.
“When compared to the actual TRAIN revenues during the same period last year, this is an increase of 65 percent,” the agency added.
The DOF said the Bureau of Internal Revenue’s (BIR) TRAIN collections exceeded target by P1.9 billion, while the Bureau of Customs (BOC) exceeded its goal by P1.7 billion.
The major gains recorded in the personal income tax, petroleum excise tax, sweetened beverage excise tax, tobacco excise tax and the documentary stamp tax generated P21.8 billion more in total, the DOF data showed.
“Losses from lower personal income taxes were originally projected at P64.5 billion, but actual losses were lower at P52.5 billion, or a saving of P11.9 billion,” the DOF said.
“This is due to better compliance, increase in registered taxpayers, and lower unemployment and underemployment rates,” it added.
Petroleum excise tax is above target by P3.4 billion, which the DOF said was due to higher than programmed volume of imports and better compliance in anticipation of the fuel marking program roll out.
Sweetened beverage excise tax is above target by P1.5 billion, due to improved compliance as result of the issuance of a revenue regulation that provided clear guidelines on the coverage of the sweetened beverage excise tax, the DOF said.
Tobacco excise tax is above target by P2.1 billion, which the agency attributed to better compliance as the government continued to crack down illicit tobacco trade.
Lastly, the documentary stamp tax is above target by P2.8 billion, given higher transaction value and better collection efficiency, the DOF said.
Meanwhile, major shortfalls are seen in the excise tax of automobiles and value added tax (VAT), generating P11.2 billion less in total, the DOF said.
Automobile excise tax is reported short by P7.7 billion due to lower volume of imports.
“January to May 2019 imports declined by 8.3 percent, partly due to the base effect of higher importation in 2018, as people took advantage of lower tax rates for higher-priced vehicles,” the DOF said.
VAT is short by P3.6 billion, and the DOF said the main reason cited by the BOC is that only six previously-exempted taxpayers (power transmission, jewelries, National Grid Corporation of the Philippines, Philippine Sports Commission, Armed Forces of the Philippines and the Bangko Sentral ng Pilipinas) reported importations which are now VATable.
“The shortfall in VAT is also seen in overall BIR VAT revenues, which is lower than the target by P28.9 billion in the first semester of 2019,” the DOF said.
“A major reason is the surge in input VAT, which reflects higher capital investment, given the infrastructure program,” the agency added.
Meanwhile, a report of global research and advisory firm Oxford Business Group (OBG) said President Duterte is bullish on the trickle-down effects of lower corporate income taxes on the country’s smaller-sized businesses under the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA).
“Since micro, small and medium-sized enterprises (MSMEs) comprise 99 percent of the country’s businesses and employ 65 percent of the workforce, (CITIRA) will ensure near-term job creation,” Duterte said in an interview for OBG’s The Report: The Philippines 2019.
The report quoted Duterte as saying the package will incentivize MSMEs to invest in innovation and technology, especially in the provinces.”
“The TRAIN law was passed in 2017 to attract investments and promote the country’s competitive products and services to the global market,” he said in the interview.