By Beatrice M. Laforga
Reporter

GOVERNMENT TAX collections plunged in the first 15 days of April, mainly as tax payment deadlines were deferred due to lockdown measures implemented in Luzon and other parts of the country.

Citing preliminary data, the Department of Finance (DoF) on Sunday said combined collections by the Bureaus of Internal Revenue (BIR) and Customs (BoC) reached only P40.57 billion from April 1 to 15.

The figure was 87.16% short of the P315.95-billion target for the period, and 84% lower than the P260.45 billion collected during the same period in 2019.

In a statement, the DoF said the BIR collected only P25.01 billion between April 1 to 17, representing 8.66% of its P288.75-billion target for the entire month. This was also 89.5% lower than the P237.93 billion collected in April last year.

DoF attributed the decline to the deferment of tax payment deadlines for income tax returns (ITR), monthly value-added tax (VAT) returns, quarterly VAT payments, among others. The deadline for filing and payment of ITRs was moved to May 29 from April 15 originally, in light of the enhanced community quarantine (ECQ) which began in mid-March.

BIR Deputy Commissioner Arnel SD. Guballa said in a mobile phone message that another deadline extension for ITR payments is “still under evaluation,” after the ECQ in Metro Manila was extended until May 15.

For the BoC, collections reached P15.57 billion in the first half of April, 42.76% short of its P27.2-billion target and 30.89% lower than the P22.52-billion collected in the same period last year.

Customs Assistant Commissioner and Spokesperson Vincent Philip C. Maronilla earlier said that the decline in oil prices and demand has dragged its revenues.

From January 1 to April 17, the total tax haul of the two main revenue-generating agencies stood at P641.62 billion — 40% short of the P1.073-trillion target and 26.3% lower than the P871.19 billion collected in the same period last year.

BIR, which accounts for 78% of the government’s tax collection capacity, generated P480.64 billion from Jan. 1 to April 17, which was short by 45.3% of the P879.18-billion target and 32% lower year on year.

Excise tax collections slumped across all products with total payments only reaching P76.47 billion during the three-and-a-half-month period, 52.75% short of the P161.84-billion target and 33% smaller compared to last year.

“The consistent large excise tax collection drawers — tobacco and alcohol — recorded significant declines in collections,” DoF said.

Excise tax collections from tobacco products reached P33.19 billion, 42.5% lower than last year’s P57.75 billion.

On the other hand, excise tax collection from alcohol products slid 26% to P17.85 billion, from P24.09 billion a year ago.

Year-to-date, the BoC’s collections stood at P160.98 billion, falling 17% short of its P193.89-billion target and 2.08% lower than the P164.4 billion generated last year.

Finance Secretary Carlos Dominguez III earlier cited estimates by the Development Budget Coordination Committee (DBCC) that if the economy posts zero growth this year due to the effects of the pandemic, the drop in revenues will reach around P286.4 billion.

However, if growth contracts by one percent, the revenue drop would reach P318 billion.

National Treasurer Rosalia V. de Leon earlier assured that the funding gap could be covered by revenues generated by other agencies, income of the Treasury, dividends from state-owned firms and other contributions.

BIR and BoC were tasked to collect P3.307 trillion this year, with BIR’s target at P2.576 trillion and BoC’s goal at P731 billion.

THE Philippine government is seeking another $500-million (P25.4-billion) loan from the World Bank (WB) to fund programs that will assist poor households and small businesses amid the coronavirus disease 2019 (COVID-19) pandemic.

The World Bank’s Board is scheduled to act on the proposed $500-million Philippines Emergency COVID-19 Response Development Policy Loan on May 20.

“The proposed operation, in the amount of US$500 million, is a stand-alone operation aimed at supporting critical policy and institutional measures taken by the government with the support of the Bank. The Development objective is to (i) mitigate the impact of COVID-19 on the poor and vulnerable households and (ii) provide financial relief to affected small and medium enterprises (SMEs),” the program information document read.

The Washington-based multilateral lender said the Philippine government’s direct cash aid program to 18 million of the poorest families and those in informal sectors; unemployment benefit program; and financial support to displaced overseas Filipino workers will have “positive impact in containing the expansion of poverty in the short-term.”

As the Luzon-wide enhanced community quarantine (ECQ) halted economic activities, the government rolled out social protection programs such as the P205-billion cash aid program to 18 million poor families and the P51-billion wage subsidy program for employees of small businesses.

“These support measures will help cushion the impact on poverty, by ensuring basic needs of poor and vulnerable households will be met during the ECQ despite the income losses incurred. These will prevent an increase in post-COVID poverty,” World Bank said.

WB estimates showed that “post-COVID-19 poverty” in the country could increase by 3.3 percentage points without government intervention while incomes could fall by 16.7% for workers in the informal sector or those under the “no work, no pay” scheme and other entrepreneurial activities due to disruptions caused by the lockdown.

Meanwhile, the WB said the government programs supporting the SME sector such as the two-tranche wage subsidy, credit guarantee scheme and tax breaks are “crucial in preventing small business owners from closing and millions of small business workers from losing their jobs.”

Citing results from a rapid survey of the government, it said 77% of micro and small firms and 62% of medium-sized firms were forced to close during the Luzon-wide lockdown while micro, small and medium enterprises (MSMEs) that remained open during the lockdown suffered an average 66.5% sales drop.

“Without strong government intervention, temporary closures may end up becoming permanent as these firms run out of working capital to finance ongoing fixed costs and risk eventually defaulting on their debt,” the World Bank said.

However, the “poor state of digital infrastructure” may lead to the slow implementation of the two social protection programs.

The multilateral development bank said the strong macroeconomic fundamentals of the country is “considered adequate” for the proposed project, with the economy maintaining its resilience to external and domestic shocks.

The World Bank also flagged that the project’s overall “risk rating is substantial,” largely due to the Philippines’ “political economy and governance challenges, macroeconomic, and weak institutional and implementation capacity.”

A more severe and prolonged virus outbreak is also seen to drag the country’s poverty reduction efforts and economic growth. The World Bank projected the Philippine economy to grow by three percent this year.

“A much worse outbreak that leads to an extended ECQ may risk overwhelming the government’s institutional and fiscal capacity to roll out enough health and social protection for its citizens,” it said.

Last week, the World Bank gave the green light for a $100-million loan for the country’s emergency COVID-19 response programs. It also approved earlier this month the $500-million (P25.4-billion) Third Risk Management Development Policy Loan to improve the government’s capacity to respond to natural disasters, including the COVID-19 pandemic.

On Thursday, the Asian Development Bank (ADB) has likewise approved a $1.5-billion loan to beef up the state’s coffers for coronavirus response.

The Department of Finance earlier said it targets to tap a total of $5.7 billion in financial assistance from multilateral agencies such as the World Bank and ADB. — Beatrice M. Laforga