Provincial governors who reiterated their support to President Arroyo amidst ongoing political uncertainties triggered by allegations of corruption in government, have now asked Malacañang to return the favor.
The local executives want a share of the expanded value added tax (EVAT) collections of the Bureau of Customs (BOC).
As such, Malacañang has asked the Department of Finance (DOF) to look into the possibility of allocating part of the BOC’s EVAT collections to LGUs.
In a memorandum to Finance Secretary Margarito Teves last week, Cabinet Secretary Ricardo Saludo said part of BOC’s EVAT collections may help LGUs in their financing requirements.
Saludo said this was among the concerns raised by provincial governors during a recent meeting in Malacañang.
In his memo, Saludo instructed Teves to “look into the possibility of sharing the BOC-EVAT collection with the local government units based on the 60 percent to 40 percent sharing scheme between the national and local government.”
The DOF has yet to make a final decision on the matter.
Latest data showed that EVAT revenues rose to P69.5 billion in the first nine months of 2007, P4.6 billion or 7.08 percent higher than the collection target of P64.9 billion for the period.
The BOC’s EVAT collections, however, fell short of the agency’s target by P3.3 billion during the period.
The BOC collected only P40.3 billion from January to September 2007.
The DOF said the BOC’s collections were negatively affected by lower collection on raw materials for petroleum products.
The agency collected P19.5 billion from the EVAT on raw materials for petroleum products as against the target of P23.3 billion.
“The lower collection stemmed from lower volume of petroleum product imports,” the DOF said.
The Bureau of Internal Revenue (BIR), meanwhile, collected P29.1 billion or ahead of target by P7.9 billion.
The DOF attributed BIR’s higher collection to earnings from incremental revenues from the additional two percent VAT (P18.3 billion), higher collection from corporate income tax of P7.4 billion, lower impact of mitigating measures of P3.6 billion and lower estimated input VAT claims amounting to P4.2 billion.
The EVAT law, passed in 2005, raised the sales tax to 12 percent from 10 percent and lifted exemptions on oil and petroleum products.
The new VAT law also increased the minimum corporate income tax to 35 percent from 32 percent, but this would be reduced to 30 percent starting 2009.