THE Department of Finance (DOF) expects to sustain the performance of the Tax Reform for Acceleration and Inclusion (TRAIN) law in terms of revenue generation in the coming years, as the measure breached its target collection for 2018 by 8.1 percent.
The confidence also stems from a presumption that the so-called losers among the TRAIN’s tax segments will eventually perform better, as the government completes its audit of why collections in these sectors did not reach target. Specifically, the tax on sugar-sweetened beverages (SSB), and the value-added tax collections are being scrutinized for their underwhelming results.
This, as Finance Secretary Carlos Dominguez III called on the DOF to continue working hard to see through the congressional approval of the remaining packages under the Comprehensive Tax Reform Program, citing the positive results of the TRAIN law as the best argument for the completion of the entire CTRP.
DOF data indicated measures under the TRAIN law generated actual collections of P68.4 billion in 2018 compared to the full-year target of P63.3 billion.
“Overall, TRAIN revenues exceeded its targets, providing additional public resources for infrastructure and human capital development programs. We expect the performance to be sustained in the coming years,” the DOF said.
Big gains collected from excise taxes on automobiles, tobacco and documentary stamp tax (DST) enabled the TRAIN law to breach the revenue goals.
Broken down, the government collected P20.6 billion in 2018 from excise taxes on automobiles, higher by 43.1 percent compared to its target for the year of P14.4 billion.
Excise taxes collected from tobacco products amounted to P9.9 billion, an expansion of 130.2 percent compared to its P4.3-billion target for the year.
Collections from DSTs amounted to P33.8 billion, higher by 16.2 percent than the target of P29.1 billion.
According to Dominguez, the TRAIN law also returned P111.7 billion to the pockets of 99 percent of wage earners in its first year of implementation in 2018, with the higher ceiling on tax-exempt individual incomes.
The DOF projected losses of P146.6 billion from the slashing of the personal income-tax (PIT) rates under the TRAIN law, but instead reported a gain of P35 billion as the losses only amounted to P111.7 billion in 2018.
Collections from excise tax on oil, with actual revenues amounting to P60.7 billion, also breached the target of P60.2 billion for the year.
The losers, audit
Meanwhile, provisions that failed to meet their respective targets for the year were excise tax collections on SSB, with a collection of P42.6 billion compared to a target of P54.5 billion; and collections from value-added tax (VAT), which amounted to only P7.7 billion, way below its P39.2-billion target.
“Sweetened beverage excise is short by P11.9 billion as the industry claims that no high-fructose corn syrup [HFCS] has been used since January 1, 2018,” the DOF added.
Beverages containing HFCS are taxed at P12 per liter instead of only P6 per liter under the TRAIN law.
“The BIR [Bureau of Internal Revenue] is conducting an audit to ascertain this claim. At the same time, the FDA [Food and Drug Administration] is also in the process of verifying if firms did submit applications to reformulate from HFCS to regular sugar. This is required before firms can legally market a new formulation,” the DOF said.
In terms of VAT collection, the Bureau of Customs (BOC) has pointed out that only eight industries reported importations, which led to the VAT shortfall. Among these industries are power transmission, jewelry, as well as government institutions.
Losses from the estate tax provision under the law amounted to P2.8 billion, higher than the expected P2.1 billion in revenue losses; while losses from donor’s tax were also higher at P2.6 billion, compared to its P1.7-billion full-year target.
Dominguez, meanwhile, pointed out that the TRAIN law as well
as the enactment of the rice tariffication law are among the recent
game-changing initiatives that best illustrate the Duterte administration’s
resolve to carry out the bold reforms and sound economic policies embodied in
its 10-point
socioeconomic agenda.
According to Dominguez, liberalizing rice imports will not only make quality rice more affordable and accessible to Filipino families, but will also lower the country’s inflation rate, revolutionize the agriculture sector and help farmers become more productive and competitive in the global economy.