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April taxes plummet amid crisis

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GOVERNMENT tax collection continued to plunge in April, largely because of the extension of tax payment deadlines amid lockdown measures, the Department of Finance (DoF) said on Tuesday.

However, Finance Secretary Carlos G. Dominguez III said there are no plans for new taxes to fund the fight against the coronavirus disease 2019 (COVID-19) pandemic.

The DoF, citing preliminary data, said combined collections of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) dropped to P105.75 billion last month, 63% lower than a year earlier and 19% short of the P131-billion target for the month.

The bulk or P71.78 billion came from BIR collections, which declined by 70% from P237.93 billion a year ago.

BoC generated P33.97 billion in revenues in April, 34.27% lower than in the same period last year and 40% short of the P56.54-billion target for the month.

For the first four months of 2020, total collections stood at P706.85 billion, 21.46% smaller than a year ago and 3.83% short of the P735.03-billion target.

“That is because we postponed the April 15 tax (deadline)… That tax will be intact because that was earned last year,” Mr. Dominguez told a Senate hearing.

The deadline for income tax payment has been moved four times following the extension of the lockdown in Luzon. The deadline is now set at June 14, from the original schedule of April 15.

VAT and excise tax collections are also expected to decline as business activity was halted during the enhanced community quarantine that started in mid-March.

“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,” Mr. Dominguez said.

The Development Budget Coordination Committee (DBCC) slashed its projected revenue collection for 2020 to P2.61 trillion — equivalent to 13.6% of the gross domestic product (GDP). This is 18% lower than the March 27 projection of P3.17 trillion, or 16.2% of GDP.

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

While the sale of government assets was recommended, it is not the right time because asset price is “quite low,” Mr. Dominguez said.

“If we can sustain our momentum by borrowing money, we should do that,” he said.

INFRASTRUCTURE SPENDING SLASHED
The DBCC also cut its 2020 projected infrastructure spending to P725.1 billion, equivalent to 3.8% of GDP. This is lower than the initial projection of P800.6 billion, or 4.1% of GDP.

The Senate convened the Committee of the Whole to discuss measures and the impact of the pandemic with government agencies such as the Department of Health and the Department of Finance.

To restart the economy, Mr. Dominguez said he recommended accelerating the “Build, Build, Build” program.

“The economic team is working on the recovery program that would help us jumpstart economic activity and provide industries the assistance they need to get back on their feet,” he said.

He also pushed for the three-phased recovery plan Bayanihan II and the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), or the revised Corporate Income Tax and Incentives Rationalization Act.

The proposed CREATE will immediately cut the corporate income tax to 25% in July from 30%.

“This will be one of the largest economic stimulus measures in the country’s history,” he said. “This also sends a strong signal to the world that the Philippines is positioning itself as a premiere investment destination for companies looking to diversify their supply chain.” — Charmaine A. Tadalan and Beatrice M. Laforga





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