Government hikes projected RVAT collection

MANILA, Philippines - The government has raised its projected collections from the reformed value added tax (RVAT) law by roughly P1 billion on expectations of a stronger economy.

The revised 2010 emerging RVAT collection target has been raised to P79.178 billion from P78.9 billion previously.

Of the amount, the Bureau of Internal Revenue (BIR) is tasked to collect P20.14 billion in RVAT while the Bureau of Customs (BOC) is expected to raise P59.04 billion, mostly from higher oil imports.

The emerging 2010 revenue target from RVAT is higher than last year’s actual collection of P75.87 billion.

Of last year’s collection, the government raised P28.09 billion in RVAT from the BIR and P47.78 billion from the BOC.

RVAT collections have become problematic since last year as imports went down and because of the reduction in corporate income tax to 30 percent from 32 percent.

However, for this year the Development Budget Coordination Committee (DBCC), the interagency group that sets the country’s macro-economic assumptions, expects imports to recover.

When imports increase, the government’s RVAT collections are also expected to climb. For this year, imports are projected to grow by 13 percent to 15 percent from a previous growth assumption of 10 percent to 14 percent.

The DBCC has yet to come out with its imports growth projection for 2011 but this is expected to continue the steady growth in 2010.

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 a whopping P121.14 billion from RVAT or P32.21 billion higher than the P88.93 billion collected in 2007.

RVAT collections have been used for social services and various infrastructure projects, government officials have said.