TOTAL revenues from the Tax Reform for Acceleration and Inclusion (TRAIN) law have breached nearly 81 percent of full-year targets after nine months, as the government exceeded its estimates from January to September by P14 billion.
Preliminary data from the Bureaus of Internal Revenue (BIR) and of Customs (BOC) showed collections reached P91.3 billion in the first three quarters of this year. Finance Undersecretary Karl Kendrick T. Chua said this exceeded the estimates for the period of P77.3 billion, thereby enabling the government to allocate funds for spending on infrastructure and human capital development.
As such, Chua disclosed that actual total revenues surpassed the estimates by roughly P14.1 billion, or 18.1 percent above target.
In terms of full-year share to the full-year estimate, the January- to-September collection was about 80.8 percent of the projected P113.1-billion tax haul this year. Compared to the actual TRAIN revenues last year, this year’s nine- month revenue was more than twice the estimated amount, or an increase of 107 percent, Chua added.
“This means we are now closer to completing the 2019 estimates, compared to where we were last year when we were trying to reach the 2018 estimates. This is definitely welcome news, especially for the infrastructure and human development objectives of TRAIN,” Chua said.
Both the BIR and the BOC outperformed the government’s estimated collections from TRAIN, as the internal revenue’s haul exceeded by P9.4 billion while that of Customs went beyond by P4.7 billion.
Major gains during the first three quarters of this year came from personal income tax (PIT), imported petroleum excise tax, sweetened beverage excise tax, tobacco excise tax and the documentary stamp tax. The total take from these taxes showed an upswing of P42.4 billion.
“As you know, one of the most significant provisions of TRAIN was the lowering of PIT. Losses from this adjustment were originally estimated at P96.4 billion, but actual losses were lower at P79.2 billion, or a savings of P17.2 billion. This was a result of better compliance, higher employment rate resulting in an increase in registered taxpayers, and lower unemployment and underemployment rates,” Chua said.
“Imported petroleum excise tax collections were above estimate by P14.3 billion, owing to higher-than-programmed volume of imported finished petroleum products, particularly diesel and gasoline. The overperformance is also evident in the overall BOC petroleum excise revenues for the first three quarters at P64.5 billion, which is more than double than the P31.2 billion recorded during the same period last year,” the finance official added.
He also said collection from sugar-sweetened beverages improved revenue performance following the issuance of guidelines on the excise tax, intended to improve industry compliance. Excise tax on these products exceeded estimates by P1.9 billion.
On the other hand, tobacco excise tax was also above estimates by P4.4 billion, which the government attributed to better compliance as it intensified its crackdown on the illicit tobacco trade.
Shortfalls
However, there were shortfalls in the collection of duty on automobile and locally refined fuel. Their combined take fell short of estimates by P25.2 billion.
“Automobile excise tax earnings were short by P11.3 billion, owing to lower import volume. This was seen, too, in the overall BOC automobile excise tax collections, which totaled P23.8 billion below the estimate and lower than last year’s take by 29.4 percent,” Chua said.
“The excise tax collections from locally refined petroleum products was short by P13.9 billion because of the decline in the volume of removals, and the shift to imported finished products,” Chua added.
The TRAIN law is the first package of the government’s comprehensive tax reform program. It rationalized income taxes by exempting minimum-wage earners and those earning below P250,000 in gross annual income from paying PIT on one end, while raising taxes on oil, fuel, automobile, sweetened drinks, among others, on the other.