BOC's VAT collection down 14.3% in 2009

MANILA, Philippines - The promises of the government’s much trumpeted value-added tax (VAT) have vanished in thin air as seen in the dwindling collections by the Bureau of Customs (BOC) last year from this type of tax.

The BOC, the government’s second largest revenue agency, collected only P133.898 billion in VAT last year or a drop of 14.3 percent from its 2008 collections of P156.330 billion.

Compared to the BOC’s VAT revenues, its excise tax collections, on the other hand, rose to P17.917 billion last year from P15.509 billion in 2008, or an increase of 15.5 percent.

Revenues from import duties, on the other hand, dropped to P69.063 billion last year, lower by 21.9 percent compared to the P88.409 billion generated in the same period in 2008.

In total, the BOC collected P220.878 billion last year, which was 15.1 percent lower than the P260.248 billion collected in 2008.

This year, the agency is tasked to collect P275.686 billion, a much lower figure from the programmed P309.526 billion, which represents a 10.9 percent cut or P33.840 billion.

Finance officials said revenues from VAT have been dwindling because of the general slowdown in the economy and the global financial crisis.

The government was counting on the Reformed Value Added Tax (RVAT) to shore up state coffers but because of the weakness in the economy and lower oil imports last year, it was not able to collect more from the controversial tax.

The RVAT law, passed in 2005, raised the sales tax to 12 percent from 10 percent and lifted exemptions on oil and petroleum products despite stiff opposition from consumers and cause-oriented groups.

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 last year.

In 2008, the government raised P121.14 billion from the RVAT law or P32.21 billion higher than the P88.93 billion collected in 2007.

This year, the government expects RVAT revenues to hit bottom if pending legislative measures that threaten to erode revenues are approved by Congress.

According to Department of Finance (DOF) estimates, the government expects to incur a P17-billion shortfall in its 2010 RVAT collections from the projected P78.9 billion for the year.

This as the government expects losses of roughly P49.5 billion a year from nine measures pending in Congress.

These measures include the bill seeking the creation of special economic zones in Bataan, Ilocos Sur, Cebu, Davao and Samal (revenue loss of P15 billion); the bill reducing the National Government’s share from royalties from indigenous energy sources to effect a reduction in electricity rates (revenue loss of P14.9 billion); the bill seeking to reimpose franchise tax on power distribution (revenue loss of P7.1 billion) and the bill seeking to exempt from income and other taxes the so-called Real Estate Investment Trust (P5.3 billion).