MANILA, Philippines—The Department of Finance said the current macroeconomic conditions were deemed favorable to government tax collection efforts and should help the Bureau of Internal Revenue (BIR) exceed its P845-billion revenue goal for the year by P1.3 billion.
The department’s estimates showed the BIR could contribute P846.3 billion to the state coffers this year if only it would maximize the use of existing resources in collecting taxes.
The BIR, however, claimed that the unmet macroeconomic assumptions of the government and the enactment of a law granting income tax relief to individual taxpayers would result in a P43.68-billion shortfall in its tax collection vis-ŕ-vis its target.
According to its computations, the BIR said it could collect P801.3 billion in taxes this year, of which P786.45 billion would come from its regular operations—which included taxes voluntarily paid by individual and corporate taxpayers. The rest represents payments of tax deficiencies in the past years.
The disparity between the projections of the finance department and the BIR was due to the differences in the two agencies’ estimates on the latter’s tax collections from its regular operations and in their assumptions on the impact of the income tax relief law.
The BIR said the unfavorable economic climate had been adversely affecting corporate profits, and that this would drag down tax collection.
The finance department said the BIR should be able to collect P824.57 billion from its regular operations this year.
“Record-high inflation seen in the past months should result in an increase in the collection of value-added tax, which is a sales tax on goods and services,” it said.
The BIR said Republic Act 9504, which exempts minimum-wage workers from income tax and has raised the personal exemption of all individual taxpayers to a uniform rate of P50,000 a year, further made its collection goal for the year unrealistic.
It said the law, which took effect in July, would slash P11.86 billion from its potential tax collection this year.
The Department of Finance said the BIR figure was an overestimation of the law’s impact on tax collection, adding that the law would trim potential tax collection this year by only P5 billion.
The implementation of the income tax relief law this year was not expected and was, therefore, not taken into consideration when the government’s tax collection goals for this year and 2009 were set.
The finance department and the BIR also differed in their tax collection estimates for 2009.
The BIR said that considering the effect of RA 9504 and the scheduled reduction in the corporate income tax next year from 35 percent to 30 percent, it could only collect P905.84 billion next year, which was short of the official goal of P968.3 billion by P62.46 billion.
For its part, the Department of Finance is expecting the BIR to collect P966.21 billion, just P2-billion short of the official target for next year.
