THIS YEAR’S collection targets of the government’s main revenue-generating agencies have been slashed once again, as economic activity remains sluggish due to the pandemic.
Based on the latest Budget of Expenditures and Sources of Financing, the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) now aim to collect a combined P2.192 trillion this year. This is a fifth lower than the P2.8 trillion the two agencies collected in 2019.
The BIR’s target was lowered by 3% to P1.686 trillion, from the P1.744 trillion goal revised last May. The BoC’s collection target is now at P506.15 billion, down 6.6% from the previous goal of P542 billion.
For 2021, the BIR and BoC’s combined collection goal was hiked to P2.52 trillion, up by 15% from this year’s target.
The BIR aims to generate P1.904 trillion, while the BoC is expected to collect 25% or P619.5 billion. Compared with their targets this year, these are higher by 12.9% for the BIR and 22.4% for the BoC.
Other tax-collecting offices were tasked to generate P17.8 billion next year.
“Where tax revenue collections are dwindling — and when government spending is most critically needed — government has to resort to deficit spending,” President Rodrigo R. Duterte said in his 2021 budget message published on Wednesday.
The revenues collected will support the state’s P4.5-trillion spending plan next year.
Mr. Duterte said the implementation of the tax measures under the Comprehensive Tax Reform Program (CTRP) will “continue to strengthen” the tax base and support higher collections.
He said the Tax Reform for Acceleration and Inclusion Act (TRAIN) is expected to generate P133.9 billion in additional revenues next year, while the second package or the Corporate Recovery and Tax Incentives for Enterprises pending in Congress could contribute P26.1 billion.
However, with the expected P97.2-billion reduction in revenues when the corporate income tax is lowered to 25% from 30% now, Mr. Duterte said the estimated tax receipts from the CTRP will be reduced to P62.7 billion next year.
The President ordered the economic team to fast-track the digitalization of the government’s financial management operations such as developing digital taxation, establishing related infrastructure and the use of technology in collecting taxes and releasing funds.
“With this at hand, we expect to limit the need for physical tax payment transactions at the BIR, thereby reducing unnecessary exposure to COVID-19 infections, but more importantly, promoting contactless and less corruption- prone transactions,” he added.
For 2022, the BIR and BoC collection targets were at P2.84 trillion, broken down into P2.178 trillion for the BIR and P663.1 billion for the BoC.
They are expected to account for 76% and 23% of the P2.86-trillion total tax revenues that year, respectively.
As of July, taxes collected by the BIR fell by 10.53% from a year ago to P1.115 trillion, while Customs collections also went down by 15.3% to P303 billion
Economic managers expect the economy to shrink by 4.5-6.6% this year before bouncing back to 6.5-7.5% growth next year. — B.M.Laforga