BIR exceeds collection target in October due to PEACe bonds

MANILA, Philippines — The Bureau of Internal Revenue (BIR) collected P75.47 billion in October, higher by six percent than the P71.17-billion goal for the month partly due to the tax on the so-called PEACe bonds.

Documents from the BIR also showed that October collection was 18.7 percent higher than the P63.56 billion recorded in the same month in 2010.

This brought revenues in the 10 months to October to P761.73 billion, missing the target of P765.32 billion by 0.5 percent.

However, the 10-month revenue was 13.5-percent higher than the P670.9 billion posted in the same period of 2010.

According to the BIR, the figures included the P5 billion in taxes due on the Poverty Eradication and Alleviation certificates or the PEACe bonds.

Earlier this month, the Department of Finance – the BIR’s parent agency — said the taxes due on the controversial debt paper had been withheld contrary to a Supreme Court order that the funds be put in an escrow account because the high court’s order was received a day late.

Issued in 2001, the zero coupon bonds were sold at a discounted price that sums up to some P10.7 billion. While the bondholders did not earn interest every quarter until the PEACe bonds matured, they earned a total of P24.3 billion or the amount equivalent to the discount.

This discount was the sum which the BIR said was covered by the 20-percent final withholding tax. The PEACe bonds matured last October 18, during which the tax was promptly collected.

The BIR’s revenue performance as of October painted a rosier picture than its earlier showing this year when the agency missed most of its targets.

University of the Philippines economics professor and former budget secretary Benjamin E. Diokno said last month that the BIR’s frequently missing its goals was “understandable” considering that the targets were too high.

The BIR, whose collections represented about three-quarters of the government’s yearly revenues, needed to meet its targets to help bridge the budget gap.

This year’s budget deficit is expected to reach P300 billion although slow government spending might result in a considerably lower figure.

The Bureau of the Treasury reported that as of the end of September, the budget deficit in 2011 settled at about P53 billion only.