THE government’s two main revenue-collecting agencies are under pressure to deliver greater collection efficiencies because the government’s tax take is expected to suffer over the short term due to an economy beaten down by the pandemic, the Department of Finance (DoF) said.
“We’ll just beat the backs of BIR and BoC (Bureaus of Internal Revenue and Customs) to do a better job at collecting taxes,” Finance Assistant Secretary Maria Teresa S. Habitan said in a mobile phone message.
Finance Secretary Carlos G. Dominguez III said Tuesday that he does not expect any new sources of revenue in the meantime with Senate leaders signalling their unwillingness to support any new taxes.
Assistant Secretary Antonio Joselito G. Lambino II said the government’s economic package, which includes a mix of subsidies to targeted sectors; deferment of tax and fees payments; and capital infusions to state-owned banks, among others, was structured as “revenue negative” and intended to prime the pump for economic activity.
“The whole package is now designed to be revenue negative, as a stimulus package, but we are confident that the country will gain in the long term by becoming more attractive to investors,” Mr. Lambino said in a mobile phone message.
From the corporate income tax cut, the government is projecting foregone revenue of P42 billion once the rate is lowered to 25% in July from 30% currently, and another P625 billion foregone over the next five years when the rate is trimmed further to 20%.
In an economic bulletin Wednesday, the DoF said the government will have to adopt “fiscal reforms, particularly tax reforms still pending in Congress to sustain” the fiscal gains made in the previous years.
Mr. Lambino said there have been proposals at the House of Representatives for “revenue-enhancing measures” that the executive department is “seriously considering.”
House Ways and Means Committee Chairman and Albay Representative Jose Maria Clemente S. Salceda filed House Bill No. 6765 or the Digital Economy Taxation Act, seeking to impose a 12% value-added tax (VAT) on advertisements, subscriptions and transactions made via electronic commerce (e-commerce) platforms.
The measure is estimated to generate P29.1 billion in fresh revenue for the government each year, including more than P9 billion from e-commerce platforms serving as withholding agents for VAT.
Earlier this month, the Finance department submitted a draft proposal for a “digital-economy VAT” to legislators, which is expected to generate P15 billion in revenue in 2021, P16.6 billion in 2022 and P18.4 billion in 2023.
The DoF’s economic bulletin indicated that revenue effort — a measure of how well a government is tapping all taxable resources — rose 1.78% year on year in the first quarter.
In April, combined collections of the BIR and BoC declined 63% year on year to P105.75 billion, after the income tax deadline fell within the quarantine period while VAT and excise tax collections fell due to weak demand. — Beatrice M. Laforga