As jobs and consumption took a hit from the COVID-19-induced recession, tax collection will slide this year, especially those coming from incomes and levies slapped on consumer goods.
For this year, the government expects to collect a total of P2.21 trillion in tax revenue, down from the actual take of P2.83 trillion last year, 2021 budget documents showed.
The Bureau of Internal Revenue’s (BIR) collections were projected to drop to P1.69 trillion in 2020 from the record high of P2.18 trillion in 2019, while the Bureau of Customs was expected to generate P498.3 billion in import duties and other taxes, down from P630.3 billion last year.
Tax take from net incomes and profits, which accounts for the bulk of the BIR’s yearly collection, is seen dropping to P786.8 billion this year from P1.15 trillion in 2019.
In particular, corporate income taxes will drop to P329.9 billion from last year’s P586.2 billion, while personal income taxes will contribute P371.2 billion this year, down from P465.5 billion in 2019.
Excise slapped on goods will decline to P286.6 billion from P317.3 billion last year, as projected collections from alcohol and tobacco products, fuel and oils, mining, motor vehicles, sugary drinks, as well as cosmetic procedures were all expected to fall from last year’s actual take.
The Tax Reform for Acceleration and Inclusion Act, which jacked up or imposed new levies on consumption while rationalizing the personal income tax regime, was projected to raise a net of P62.2 billion in revenue gains this year, down from P130.7 billion last year.
The two laws that slapped higher excise on cigarettes, e-cigarettes and alcoholic beverages since the start of this year while providing value-added tax exemption on certain medicine will raise P7.9 billion in 2020.
Meanwhile, forgone revenues from the proposed Corporate Recovery and Tax Incentives for Enterprises Act will amount to P44.6 billion if the bill aimed at slashing companies’ tax rate to 25 percent retroactively in July from 30 percent at present—the highest in the Association of Southeast asian Nations—will be passed this year to provide relief to firms badly hit by the COVID-19 pandemic.
As such, the Duterte administration’s comprehensive tax reform program will net P25.7 billion in revenues for the government this year, down from last year’s P134.7 billion.