DOF assures no new taxes despite dwindling revenues

The Department of Finance (DOF) said the national government will not propose new tax measures amid the coronavirus pandemic despite its dwindling revenue resources.

Finance Secretary Carlos G. Dominguez III said that they will adhere to the Senate leadership’s “suggestion” not to resort to new taxes in raising funds for the country’s coronavirus response.

Based on the latest collection report released by the DOF, the Bureau of Internal Revenue (BIR) and Bureau of Customs continued their plummeting tax haul in April, which fell by more than half yearon-year.

Total collections of the government’s two main tax agencies declined last month by 63 percent to ₱105.75 billion from ₱289.6 billion in the same month last year.

“We have no new sources of revenue at this point in time, as we are following the suggestion of Senate President, that we will not propose any new taxes,” Dominguez said, referring to Senator Vicente C. Sotto III.

But Dominguez explained the decrease in tax collections was not all actual revenue losses for the government, noting this is just because the BIR “postponed the April 15 tax [payment deadline for income tax returns.”

“That tax will be intact because that was earned last year,” Dominguez said.

However, the finance chief also said that there are tax losses, which the government can no recovery because they are correlated to the temporary closure of business establishments during the implementation of quarantine measures in the country.

“What we really lost actually is the VAT [value-added tax] collections, the excise tax collections between mid-March until probably the end of May. That is the big loss,” Dominguez said.

With weak tax collections, Dominguez said the government will need to increase its borrowings to bridge the widening gap between the expenditures and revenues.

The economic managers already slashed their expected revenues this year to ₱2.61 trillion from ₱3.17 trillion.

As of April 30, the BIR and Customs collections reached ₱706.85 billion, lower by 21 percent compared with ₱900.33 billion in the same period last year. The amount is also below the ₱735.03-billion target.

From January to April, tax collection of the BIR took a nosedive of 25 percent to ₱527.41 billion, and was short by 0.19 percent against the ₱528.44-billion target for the period.

Likewise, Customs’ collections dipped by seven percent at end-Aril to ₱179.44 billion as well as below by 13 percent compared with the ₱206.59-billion goal.

Dominguez earlier assured the public that even with the significant decline in both bureaus' revenue collections, the country remains “financially able” to meet the unexpected challenges of the pandemic.