Revenues fail to meet 1st quarter target

MANILA, Philippines — Taxes collected by the country’s two largest revenue-generating agencies reached only P600.86 billion in the first quarter, falling short of the target as a result of the enhanced community quarantine in Luzon, according to the Department of Finance (DOF).

According to preliminary data from the DOF, revenues generated by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) reached P600.86 billion in the first three months, 1.66 percent lower than the previous year’s   P611.03 billion.

The latest collection figure was also P156.26 billion, or 20.64 percent, short of the government’s P757.12 billion tax revenue target for the first quarter.

According to the finance department, the BIR and BOC took the biggest hit in March as their combined collections amounted to only P163.15 billion, 17.45 percent down from P197.64 billion in the same month last year, and 34.35 percent short of the P248.5 billion target.

The DOF attributed the decline in government revenues to the implementation of the enhanced community quarantine which halted most economic activities in Luzon.

The quarantine started on March 16 and has since been extended to April 30 to contain the spread of the coronavirus disease 2019 or COVID-19.

Similar containment measures have likewise been implemented by local government units (LGUs) in other parts of the country.

Despite the weak revenue performance, Finance Secretary Carlos Dominguez assured the public that the country is “financially able” to meet the requirements in fighting the outbreak and mitigating its economic impact.

“Our tax collections are definitely going to be a bit lower than our original target, but as I said, these are things that we can finance,” Dominguez said.

The finance chief had said the economic policies put in place by President Duterte since 2016 has given the government ample fiscal headroom to meet the challenges of the contagion.

Further broken down, the DOF said the BIR alone, collected P455.45 billion in the first quarter, which is 2.86 percent lower than the P468.86 billion it collected in the same quarter of 2019. This is likewise 22.86 percent below the agency’s P590.43 billion target.

On the other hand, the BOC’s revenues from January to March   rose by 2.28 percent to P145.41 billion from P142.17 billion last year. Still, this was 12.76 percent lower than the bureau’s P166.69 billion goal for the quarter.

For   March alone, the BIR’s collection declined by 20.06 percent to P118.35 billion from P148.05 billion in the same period last year, and fell short of the March target of P190.48 billion by 38 percent.

Revenues generated by the BOC during the month likewise decreased by 9.66 percent to P44.8 billion, failing to meet the target of P58.02 billion.

Citing estimates by the Development Budget Coordination Committee (DBCC), Dominguez said earlier that COVID-19 may cut revenues by as much as P286.4 billion if economic growth settles at zero percent this year.

If the economy contracts by one percent, the drop in revenues is expected to reach P318.9 billion.

The DOF estimates that the economy may virtually stand still with zero percent growth this year, or possibly contract by 0.8 percent due to the pandemic.

As a result of lower revenues, Dominguez said the country’s fiscal deficit could widen by as much as 5.3 percent this year.