Tax collections shrink 48% for 3rd straight month
By CHINO S. LEYCO
Collections of the national government’s two main tax agencies tumbled for the third straight month as the coronavirus pandemic slowed consumer spending and closed-down many businesses, the Department of Finance (DOF) said yesterday.
In a statement, the DOF said the total tax haul of the Bureau of Internal Revenue (BIR) and Bureau of Customs plummeted by 48 percent to P135.45 billion in May from P263.64 billion in the same month last year.
The May collections marked the national government’s third month in a row of contraction after the double-digit drops for March and April.
Against the target of P353.8 billion, the BIR and Customs actual collections last month were short by 62 percent.
For the BIR, the agency responsible for more than 80 percent of government revenues, collections reached P105.44 billion, down by 49 percent against P205.47 billion last year and below by 67 percent against the P320.5 billion goal.
Likewise, Customs collection contracted by 48 percent to P30.01 billion in May from P58.17 billion a year ago, and short of the P33.33 billion target by 10 percent.
Effects of the coronavirus lockdown also significantly reduced value-added tax (VAT) collections of the government, which have fallen by 52 percent to P15.43 billion from P32.38 billion in May last year.
To offset weak taxes from land-based companies, Finance Secretary Carlos G. Dominguez III said the government will soon implement a system that will effectively capture the 12 percent VAT from sales of technology companies like Netflix, Facebook, among others.
“We are currently working on a system to collect VAT from these giant tech firms. We are planning to roll this as soon as possible,” Dominguez told reporters in a mobile phone message.
In the first five-months of the year, total VAT collections amounted to P125.52 billion, lower by 21 percent compared with P159.22 billion in the same period last year.
The DOF said that the anemic tax revenues was “a result of the coronavirus pandemic’s economic fallout.”
At end-May, total collections of the BIR and Customs plunged by 25 percent to P874.91 billion from P1.164 trillion in the same period last year.
The two tax agencies also failed to hit their combined collection goal in January May amounting to P1.062 trillion by 17.65 percent.
The BIR collections as of last months reached P664.74 billion, lower by 27 percent compared the P912.26 billion in the same period in 2019, while Customs tax haul fell 16 percent against to P210.18 billion.
For 2020, the national government already reduced its revenue target from P3.17 trillion to P2.929 trillion, as the economy is expected to contract by 2.0 percent to 3.4 percent.