DoF notes select taxes exceeded first-half targets

INCOME, percentage and excise tax collections of the Bureau of Internal Revenue (BIR) exceeded targets last semester, the Department of Finance (DoF) said in a statement on Wednesday.

The DoF cited the BIR’s preliminary revenue data showing total income tax collected in January-June totaled P500.59 billion, 2.27% more than the P489.46 billion recorded in the same period last year and about 11.15% higher than a P450.38-billion target.

Percentage tax collections reached P44.16 billion that period, 15.47% more than the P38.24 billion the past year, beating the P43.74-billion target by 15.48%.

Value-added tax ( VAT) collections, however, failed to meet the target. The DoF said VAT collections last semester totaled P179.95 billion, up from the past year’s P178.44 billion but 19.09% short of a P222.42-billion target.

“… [I]ncreases in the percentage and income tax collections over the 2017 period indicate that SMEs and self-employed individuals that have not exceeded the VAT threshold are now opting to pay either the eight percent income tax on gross sales or receipts and other non-operating income or the percentage tax and the graduated income tax rates under TRAIN,” the DoF explained.

Repubic Act No. 10963, or the Tax Reform for Acceleration and Inclusion law that went into effect on Jan. 1 reduced personal income tax rates, removed some VAT exemptions and raised the VAT threshold to P3 million from about P1.9 million.

The same law also raised taxes on tobacco, minerals, fuel and cars, among others, and imposed new taxes on sugar-sweetened drinks and cosmetic procedures.

Finance Assistant Secretary Mark Dennis Y. C. Joven told reporters on Thursday last week that excise tax collections reached P152.72 billion last semester, 71.43% more than the year-ago P89.09 billion and beating a P136.82-billion target. “Total excise tax collection grew by 11.6% above target for the first half of the year,” he said.

“Sin” taxes — or those imposed on alcohol and tobacco products — accounted for about 74% of total excise tax collections. Mr. Joven said that taxes collected from such products reached P112.46 billion last semester, up 41.38% from the P79.5 billion collected a year ago and beating a P77.54- billion target by 45.03%.

Tobacco excise taxes alone generated P78.95 billion, 53.5% more than the year-ago P51.43 billion and 53.53% higher than the P51.42-billion target.

Alcohol taxes raised P33.51 billion, up 19.2% from the P28.11 billion the past year and 28.3% more than the P26.12-billion target.

“’ Yun ’ yung pinaka - aggressive — ’ yung growth ng tobacco ( tax collections showed the most aggressive growth),” Mr. Joven said, adding that “analysis shows there is some front-loading kaya medyo tumaas ’yung collection (increased by that rate) for the first half of the year.”

Since July, tobacco taxes are now set at P35 per pack from P32.50, as mandated by the TRAIN law. The taxes will gradually increase to P40 per pack until January 2022.

Finance Secretary Carlos G. Dominguez III said that revenues from tobacco products should steady after the hike in tax rate. “That will catch up, don’t worry about it. Because you cannot keep cigarettes long. First of all, you know there’s inventory carrying cost also… you have to warehouse it… you know, the quality deteriorates because of the humidity. You can front- load some but I know you can’t front-load more than six months,” he said.

Mr. Joven said that “… our statistics… show faster growth in excise tax collection; so we hope that this trend continues…”

“The problem with front-loading, you can only do so much. You cannot front-load your entire consumption or… from July to December,” he added.

DoF data also show excise tax collections generating P18.03 billion from oil products, 31.37% below target but 180.8% higher year on year; P2.92 billion from automobiles,

14.09% below target but 40.62% more than the past year; and P1.56 billion from minerals, missing the target by about 29.39% but still 67.16% more from last year’s first semester.

The BIR aims to collect P2.039 trillion this year. Latest data show it raked in P827.73 billion in the five months to May — up 17% from the P716.8 billion in 2017 — which is equivalent to 40.59% of the full-year target for 2018.