Excise tax collection falls in March

MANILA, Philippines - The government’s excise tax collections on so-called sin products  fell by P2.25 billion last month due to the practice of tobacco companies called “front-loading”.

Frontloading means that tobacco firms advanced their shipments to avoid the payment of higher excise taxes.

BIR commissioner Kim S. Jacinto-Henares said the government had expected a decline in  excise tax revenues in the first half of the year as  a result of the early withdrawal of stock from warehouses as practiced by manufacturers to avoid higher liabilities. 

Henares, however, expects excise tax collections to improve beginning July or once tobacco companies run out of stock, noting that volume has dropped by as much as 70 percent in January alone while excise tax revenues fell by only 50 percent during the month.

Lower excise tax collections in March partly contributed to the decline in BIR’s total revenue collections to P74.8 billion from P75.2 billion, thus falling short of its P89.03-billion target during the period.

Henares said this can be explained by the fact that the agency  only had three weeks in March to collect given the holidays. 

She said the agency had several non-recurring collections in March, amounting to P8 billion.

Henares is hopeful the agency will improve its tax collections in the next few months, citing its intensified campaign against tax evasion.

For the first quarter this year, revenue collections reached P244.1 billion, up 6.56 percent from the same period in 2012 but still short of the P267.08 billion target.

However, the BIR sees tax collections rising by 44 percent with the implementation of the new sin tax that imposes higher rates on tobacco and alcoholic beverages  with around  P102.4 billion expected to come from excise taxes, higher than  the P72. 1 billion targeted last year.

The sin tax law, passed in December last year, is expected to raise some P34 billion in additional revenues during the first year of its implementation and P184.31 billion over the next four years.

The BIR is tasked to raise P1.24 trillion this year, 16 percent more than the P1.07 trillion target in 2012.