Government lost P7.7 billion in 2020 after 119,596 businesses close

MANILA, Philippines — About P7.767 billion in “forgone revenues” have been incurred by the government as a result of the months-long lockdown, courtesy of around 119,596 businesses that have shut down due to the global pandemic, tax records showed yesterday.

Bureau of Internal Revenue (BIR) Deputy Commissioner Arnel Guballa told the ways and means committee of the House of Representatives, headed by Albay Rep. Joey Salceda, that collections decreased in 2020 by about 10 percent compared to that in 2019.

He said one of the obvious reasons for the slump in tax collection was the fact that thousands of business enterprises were forced to close shop, primarily because a vast majority of the population remained indoors in their homes.

The data BIR culled was that government lost P7.7 billion because 119,596 businesses shut down.

Guballa disclosed the BIR collected a total of P1.956 trillion in 2020, which is slightly lower compared to the P2.186 trillion in taxes collected in 2019.

“Out of the P1.9 trillion collection, and if you compare it with the 2019 figures which showed a decline of 10 percent because of the 2020 lockdown, it still commensurates with the collection of the BIR,” he said.

“And if we compare the tax types, collected tax types from 2019, or on a year-on-year collection, there is a negative 10.53 percent or a total of P230.13 billion,” Guballa told the Salceda committee.

Simply put, taxes collected were lower by 10.5 percent or P230.13 billion compared to the P2.186 trillion the BIR collected in 2019.

Nevertheless, while there was a decrease in tax collection, the BIR still managed to exceed its target for fiscal year 2020 where they reached P1.69 trillion, or a 15.14 percent hike from January to December 2020, the highest percentage in BIR’s history for two decades.

The P1.956 trillion BIR collected in 2020 is actually 16 percent higher than its P1.685-trillion target last year.

Based on 2020 BIR data, the agency collected P1.045 trillion in income taxes, P351.44 billion in value-added tax (VAT), P296.08 billion in excise taxes, P117.16 billion in percentage tax and P145.73 billion from other taxes.

In 2019, the BIR collected P1.155 trillion in income taxes, P406.08 billion in VAT, P317.27 billion in excise taxes, P118.70 billion in percentage tax and P143.43 billion from other taxes.

Stop fuel smuggling

At the same time, Salceda called on the Department of Finance – the mother agency of the BIR – to observe stricter Customs enforcement on imported petroleum products that have deprived government of some P357 billion in taxes due to fuel smuggling.

“We have lost P357 billion in forgone revenues due to fuel smuggling from 2010 to 2019. While fuel marking has helped lower smuggling, the bleeding on the revenue side is still growing because we raised taxes on fuel products in 2018,” he said.