Bureau of Internal Revenue falls 31% short of 2008 VAT goal

MANILA, Philippines - The Bureau of Internal Revenue (BIR) failed to meet its value-added tax (VAT) collection goal last year of P204.789 billion, latest data from the tax agency showed.

The BIR, the government’s main revenue earner, collected only P140.318 billion or 31.51 percent less than the goal. This means that the BIR incurred a revenue shortfall of P64.561 billion from VAT.

The Department of Finance (DOF) wants the BIR to explain the shortfall, saying that the agency’s reporting system must improve.

“The BIR has a very poor system of reporting VAT collections,” said Finance Undersecretary Gil Beltran.

He pointed out that VAT collections should increase along with an increase in income tax.

Latest data showed that in 2008, the BIR collected P482.249 billion, P4.698 billion more than the income tax target of P477.551 billion for the year.

Beltran said the DOF would look into the matter and ask the BIR to reassess its system of reporting and see whether there is room for improvement.

The National Government had high hopes that collections from VAT would help boost state coffers and sustain the government’s subsidy program for the poor. Revenues from RVAT are being used for social services and infrastructure projects, government officials have said.

The Reformed Value Added Tax (RVAT) 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 has been reduced to 30 percent this year.

In 2007, the DOF’s VAT collections amounted to P88.93 billion or slightly above the target of P88.88 billion. The 2007 figures were also P12.04-billion higher than the 2006 collection of P76.88 billion, data also showed.

In 2006, RVAT collections amounted to P76.888 billion, also higher than the programmed revenues for that period of P75.79 billion.

This year, the BIR is tasked to collect P865.5 billion from the revised goal of  P910.8 billion.

Under the proposed 2009 budget, the BIR is tasked to collect P965 billion this year. Last year, it missed its P845 billion revenue target after it only managed to collect P778.2 billion.