Sin tax collection up 46% in H1

MANILA, Philippines - The Bureau of Internal Revenue (BIR) collected P38.54 billion in excise taxes on alcoholic beverages and tobacco products in the first half of the year, up 46 percent from a year ago level.

Excise tax collections from tobacco products amounted to P22.38 billion, 53.14 percent higher than the previous year while tax collections from alcohol products reached P16.16 billion or an increase of 37 percent from a year ago.

The P12.15-billion increase in sin tax collections accounted for less than half of the expected P34-billion additional revenues that the government seeks to raise in the first year of implementation of the  sin tax reform law.

The law, which raised taxes on tobacco and alcohol, took effect on Jan. 1.

With the expected additional revenues from the sin tax law, the government is eyeing to collect P93.18 billion in excise taxes on the so-called sin products this year. The amount is 64 percent more than the P56.84 billion collected in 2012.

The BIR expects to sustain the growth in excise tax collections as tobacco firms run out of stock.

The government expects tax revenues to rise by 44 percent this year with the six tax measure.

In another development, the BIR is keeping an eye on tax payments made by government suppliers in its quest to drive greater tax compliance and shore up revenues.

Internal Revenue Commissioner Kim Henares said the agency is checking whether government suppliers pay the right taxes. “We’re monitoring, verifying and cross checking data on value added tax and withholding tax. These are the two things we need to compare,” Henares said.

Under the withholding tax system, the government is assured that tax is collected in advance even before it reaches the hands of the income recipient.

She said the BIR is also currently looking into the 1.4 million self-employed individuals and professionals that failed to file income tax returns last year.

Henares said that of the 1.8 million self-employed and professionals registered with the Philippine Regulatory Commission, only 400 paid income taxes.

“So we have to look for those who did not file a return. We have to compare it with the record of PRC,” she said.

Henares said the BIR would continue to work with the PRC, Integrated Bar of the Philippines and other professional associations to compare its list of professionals from its database.

The Department of Finance (DOF) earlier urged professional associations to support government’s tax campaign

Based on BIR data, 81.5 percent of the P223-billion individual income taxes paid last year was accounted for by regular employees whose taxes are automatically deducted from their wages.

The government plans to widen the tax base of self-employed individuals and professionals to 1.8 million by 2016. This is expected to result in a two-percent increase in the country’s tax effort by the same year.

The BIR, which is the government’s main revenue-generating agency, is tasked to collect P1.25 trillion this year or an increase of 17.59 percent from the 2012 performance. The assumption is based on a gross domestic product growth forecast of six percent for the year.

Meanwhile, the BIR will limit the issuance of authority to release imported goods (ATRIG) to just one automobile to make sure that the government gets the right taxes on imported motor vehicles.

Kim Henares said the implementation of the one ATRIG-one automobile policy is aimed at “ensuring that the importation of automobiles are fully accounted for with the end in view that revenue collections of the government are property protected.”

The move is aimed at ensuring that the proper excise tax and VAT are paid on every imported vehicle subject to taxation.

“With respect to the importation of automobiles, one ATRIG shall be issued for each unit of automobile with a net importer’s price of over P2.11 million excluding value added and excise taxes,” Henares said.

Henares said pending enhancement of the Philippine National Single Window System on ATRIG, a separate notarized application for ATRIG should be filed and signed by the importer or his duly authorized representative with the prescribed documentary stamp tax affixed for each and every unit of automobile.

The Department of Finance (DOF) earlier said it was looking at clamping down on importation of motor vehicles from major Asian automotive makers.

Finance Secretary Cesar Purisima said the agency and the Board of Investments were looking at importations of cars from major auto exporting Asian countries that declare construction value, significantly lower than how much they sell the cars in their home markets.