Gov’t to review 2015 tax-collection goals

MANILA, Philippines–The government will review the revenue targets of its top tax-collection agencies as cheaper oil as well as higher tax-exemption caps would likely drag down this year’s take, Budget Secretary Florencio B. Abad said on Tuesday.

But despite possibly lower tax collections this year, Abad told reporters that the government’s top priority in the fiscal space remained ramping up public spending.

According to Abad, government spending improved toward the end of last year and the faster disbursement of funds for public goods and services spilled over last January, especially for the rehabilitation of areas flattened by Super-typhoon “Yolanda” as well as the earthquake that shook central Visayas in 2013.

“It’s very likely that we could have spent more coming into the first quarter,” Abad said, without disclosing figures.

Abad said measures have been put in place to make operations of government agencies more efficient while increasing expenditures by transferring the responsibility to spend on infrastructure projects to implementing agencies such as the departments of public works and highways and of transportation and communications.

But when in comes to tax revenue collections—where the government sources the bulk of the annual budget—the Cabinet-level Development Budget Coordination Committee (DBCC) would look into the impact of lower global oil prices and higher tax-exemption caps, Abad said.

“The BOC [Bureau of Customs] will suffer a significant reduction [in collections] because of the more than 40-percent drop in oil prices. That’s going to significantly affect them,” Abad noted. The BOC had said that it stood to lose P40 billion in collections this year due to cheaper oil, making its P456.4-billion target “impractical and unrealistic.”

As for the Bureau of Internal Revenue (BIR), Abad noted the recently approved increased tax exemption on workers’ bonuses to impact on income tax collections. The BIR has already slashed its 2015 goal twice, as the law signed by President Aquino that lifted to P82,000 from P30,000 previously the tax-exemption cap on 13th-month pay and other bonuses was seen to result into revenue leaks worth P26 billion to 30 billion.