Tax revenue up 10% but 4% short of P2-trillion BIR target

The taxman did not meet his collection target in 2018 despite the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, a revenue measure consumers blamed for rising prices of basic goods and services.

Government revenue collection fell short of the target set for last year but rose 10 percent from the level in 2017, officials said on Tuesday.

At a hearing of the House committee on ways and means, the Bureau of Internal Revenue (BIR) said its collection last year missed its P2.04-trillion target by 4 percent, or P82.04 billion.

Lawmakers were appalled that the BIR reported a shortfall in tax collection, when it was expected to generate higher revenues due to the implementation of the TRAIN law.

BIR collections rose to P1.96 trillion in 2018, the first year of TRAIN law’s implementation, from P1.78 trillion in 2017, or up 10.2 percent.

Personal income tax

Due to the lower tax rate, revenue from personal income taxes declined by P46.2 billion, or 4.5 percent, from the 2017 collection and missed the 2018 target by P42.47 billion.

Last year’s target was lower than the P1.03 trillion in income taxes collected by the BIR in 2017, as the TRAIN law gave tax relief to personal income taxpayers.

Value-added taxes fell short of the 2018 goal by P77.6 billion, or 17.8 percent, P7 billion lower than that posted in 2017.

Collection from excise also missed the 2018 target by 12.67 percent, or by P42.17 billion, according to Assistant Revenue Commissioner Alfredo Misajon.

Misajon attributed the shortfall to the drop in government collection of excise on fuel products, sweetened beverages, vehicle sales, minerals and cosmetic procedures.

“We saw that there was an erosion from local products due to the loss of market share of our two big players [refiners Petron and Shell] over that of importers, small players, whose excise tax is collected by the [Bureau of Customs],” he said.

Fuel marking project

The P10 billion that was projected to have been derived from the fuel marking project, aimed at addressing fuel smuggling, has not materialized, as it is “still under consideration,” Misajon said.

The collection from excise on sweetened drinks also suffered a P16.7-billion shortfall because manufacturers have shifted from using imported high fructose content sweeteners with a tax rate of 12 percent, to locally produced sweeteners, which are taxed at 6 percent, he said.

The drop in the collection from excise on vehicles in 2018 was also lower, as car sales spiked in 2017 in anticipation of the higher costs in 2018 due to the imposition of the TRAIN law, Misajon said.

Excise collection from minerals also fell below goal due to an appeal for tax exemption lodged by Semirara Mining and Power Corp. as well as the suspension of several mine operations being reviewed by the government.

The government, however, surpassed its 2018 target for revenues from “other taxes” (P63.9 billion) and percentage taxes (P16.3 billion).

For 2019, the BIR was tasked with collecting P2.339 trillion. —REPORTS FROM MELVIN GASCON AND BEN O. DE VERA