BIR sees spike in January tax collection
The Bureau of Internal Revenue (BIR) saw a double-digit percentage spike in tax collections last month on higher taxes on all sugar-sweetened beverages (SSB) and other commodities slapped by the newly implemented Tax Reform for Acceleration and Inclusion (TRAIN) law.
Without citing specific amount, BIR Commissioner Caesar R. Dulay said that the tax collected in January went up by 15 percent.
When asked if it was because of TRAIN, Dulay said "I don’t know but I can tell you that the tax [we collected] on sugar-sweetened beverages reached R2 billion."
"In less than a month, [we collected] R1.4 billion in 18 days. That’s a new addition because we don't have that in 2017," Dulay told reporters on the sidelines of 2018 Tax Campaign Kickoff held in Pasay.
TRAIN, which became effective January 1, imposed taxes on SSBs and other products.
Once without taxes, SSBs have been slapped a tax rate of R6 per liter while drinks with high fructose corn syrup (HFCS) are taxed R12 per liter. Beverages that normally has high amount of HFCS are soft drinks and energy drinks.
For this year, BIR is expected to raise a record R2.039 trillion from tax collections, an increase of nearly 2 percent compared to its original target of R2.005 trillion.
The government also expects to raise R130 billion from TRAIN alone this year.
Along with higher tax effort, Dulay said the BIR’s tax collection in 2017 was up by 12.92 percent, stronger than its five-year average growth rate of 9.31 percent to 9.71 percent.
For this year, Dulay said he is optimistic that BIR’s tax effort would further improve this year following the enactment of TRAIN.
Finance Secretary Carlos Dominguez III on Friday has directed BIR to zeroin on ways of properly collecting taxes from the succeeding tax reform packages that the Duterte administration will push in Congress this year to further make the current system simpler, fairer and more efficient.
The next tax reform packages include reducing corporate income taxes complemented by the modernization of the fiscal incentives granted to businesses, which the BIR should study thoroughly on top of efficiently collecting the incremental revenues from TRAIN.
Meanwhile, BIR's tax effort ratio — the measure between government’s tax collection and the country’s whole economy as measured by its gross domestic product (GDP) — grew last year on the back of a more efficient tax collection.
He said the administrative adjustments that have to be made to ensure efficient collections from the TRAIN and the other tax reform packages rest in large part on the BIR’s Large Taxpayers Service (LTS), whose members are considered the “shock troops” of the entire bureau’s revenue efforts.
“This year, we expect to get the succeeding packages of the tax reform program through the legislative process. Included in these packages are the reductions in the corporate income tax rate which we expect to balance with the modernization of the many incentives given out to investors. This early, I hope the BIR will begin studying the ways and means to properly collect the taxes due under this new law,” said Dominguez.
Dominguez also thanked the “hardworking people of the Bureau of Internal Revenue” for this agency’s successful campaign last year against cigarette manufacturer Mighty Corporation, which enabled it to hit over 97 percent of its revenue target in 2017 after it was able to collect a record amount of R30 billion from the firm.
“This is the largest settlement ever in the country’s history, which was the result of the intensified and coordinated drive by the BIR and the Bureau of Customs (BOC) against one of the biggest tax cheats in our history,” Dominguez said.
In 2017, BIR's tax take improved by 13 percent to R1.779 trillion, a shortfall from its target.
To be exact, the total 2017 collections exceeded the R1.576 trillion the BIR collected in the previous year but fell short of its R1.829-trillion goal for last year.
Dulay said in a previous report that the ratio of the agency’s total revenue take as a percentage of the country’s economy stood at 11.26 percent last year, a significant improvement compared with its five-year average of 10.5 percent to 10.9 percent.