TRAIN pulls off pleasant surprise: Collection exceeds target

It was a pleasant surprise for finance officials.

Collection from new or higher excise on oil, sugary drinks and cigarettes exceeded expectations and made up for disappointing numbers from motor vehicle and value added taxes.

Latest Department of Finance (DOT) data showed the government collected by end of June at least P55.6 billion in net revenue from the implementation of the Tax Reform Acceleration and Inclusion Act (TRAIN).

The collection was well above the P52.1 billion target for the firs six months of 2019.

Actual collection from January to June flew by 65 percent and already accounted for nearly half, or 49.2 percent, of the 2019 collection goal of P113.1 billion.

The two main revenue collectors—Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR)—exceeded their six-month TRAIN collection targets. BOC collected P13.8 billion while BIR took in P41.8 billion.

DOF data showed that revenue waived through lower personal income taxes under TRAIN amounted to only P52.5 billion in the first half o 2019, lower than the projected P64.5 billion.

This was “due to better compliance, increase in registered taxpayers and lower unemployment and underemployment rates,” said the DOF.

January-June collection from higher petroleum excise was P54.4 billion, exceeding target because of “higher-than programmed volume of imports” and the implementation of fuel marking, the DOF added.

After the BIR issued a revenue regulation that clarified the coverage of the new excise tax on sugar-sweetened beverages, compliance improved and led to actual collection surpassing target by P1.5 billion, according to the DOF.

The BIR had conducted an audit of sugary drink manufacturers after some firms claimed they were no longer using high fructose corn syrup (HFCS) to avoid being slapped a higher P12-per-liter excise. Reformulated sweetened drinks using ordinary sugar were being levied just P6 a liter or half the tax of HFCS-sweetened beverages.

The crackdown on illicit cigarette trade by the joint BOC-BIR “strike team” also led to excess collection of P8.1 billion from “sin” products, the DOF said.

Also, the DOF said the take from higher documentary stamps was P20 billion, higher than target due to “higher transaction value and better collection efficiency.”

However, excise collection was down to only P1.2 billion no thanks to a decline in imports.

Imports of vehicles fell by 8.3 percent from January to June because most buyers “took advantage of lower tax rates for higher-priced vehicles” in 2018.

The actual VAT take was short by P3.6 billion.

Last January, the BIR announced that it will audit percentage of tax payments to see if there were taxpayers taking advantage of the lower VAT-exempt threshold for small businesses under TRAIN.

Internal Revenue Commissioner Caesar R. Dulay had said the BIR will “monitor selected taxpayers” for compliance with TRAIN, which raised the threshold for tax exemption of small and medium enterprises from P1.9 million previously.

DOF officials had said that those paying VAT before shifted to paying percentage tax, but collections from percentage taxes had also been lower.

DOF data also showed that TRAIN targets for coal and mining excise, donor’s tax, estate tax, capital gains of non-traded stocks, FCDU and corporate income tax from the state-run Philippine Charity Sweepstakes Office (PCSO) also fell short of target from January to June./TSB