IMPLEMENTATION of the Tax Reform for Inclusion and Acceleration (Train) law substantially boosted the Bureau of Internal Revenue’s (BIR) first quarter earnings, officials told legislators on Wednesday.
Higher taxes, particularly for tobacco products, led to a P12.532-billion net gain from Train for the BIR, data presented at the House of Representatives showed.
A P3.185-billion net loss had been expected for the quarter but total Train earnings of P39.102 billion more than offset P26.570 billion in foregone revenues.
Broken down, P14.972 billion came from tobacco excise taxes, P8.718 billion from documentary stamp taxes, P7.703 billion from sugar-sweetened beverages, P4.729 billion from petroleum, P1.124 billion from stock transaction taxes, P1.004 billion from capital gains on non-trade stocks, P363.71 million from car sales, P264.96 million from mining, P159.70 million from foreign currency deposit units, PP61.060 million from donors, P305,000 from coal and P7,000 from cosmetics.
Losses, on the other hand, came from personal income taxes (P23.344 billion), value-added taxes (P3 billion) and estate taxes (P225.22 million).
“Personal income tax was offset by some of the tax types that registered impressive increases because of the Train law, notably the excise tax on sugar-sweetened beverages and excise tax on tobacco,” BIR Assistant Commissioner and officer in charge Alfredo Misajon told a congressional oversight committee.
“We can only surmise that some of this or the balance can be attributable to our field performance, especially the enforcement processes in our revenue regions,” he added.
The additional Train revenues boosted the BIR’s first quarter collections to P423.1 billion, 14 percent or P52.7 billion higher than a year ago and 17 percent better than programmed.
Implemented beginning January, the Train law exempts those earning annual taxable incomes of P250,000 and below from paying personal income tax.
To offset the loss, the law also contains revenue-enhancing measures that aim to support the government’s plans to boost spending on infrastructure and human capital development.
The law’s provisions include the removal of certain value-added tax exemptions; adjusted tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange and stock transactions; and new taxes for sugar-sweetened beverages and non-essential cosmetic procedures.
The Train also introduced cuts in estate and donor’s taxes.
The government has said that Train revenues would finance the “Build Build Build” program, which Finance Secretary Carlos Dominguez has said would be threatened given calls to suspend the law, either in full or in part.
Senator Sherwin Gatchalian last week said he would recommend the suspension of the implementation of excise taxes on oil or increase the P200 cash aid for poor families if inflation rate continues to increase beyond 4 percent by end of the third quarter.
Dominguez, in a statement, said “The suspension of the tax reform program will certainly tend to slow down the ‘Build Build Build’ program, and possibly negatively affect the government’s ability to fund the free tuition program as well as the increase in salaries of the police and military.”
The Finance department has rejected claims that the Train law was responsible for rising inflation, saying it had a direct impact on just non-alcoholic beverages, tobacco, electricity, gas, and other fuels, and transportation.
Higher taxes pushed inflation up by just 0.4 percentage points, the department also said, lower than the estimated 0.7 percentage points.
It said other factors such as a rise global oil had driven inflation to 4.5 percent — beyond the 2.0-4.0 target — in April.
Amid concerns over rising inflation, the Finance department has also said that it continued to support the approval of further tax hikes for tobacco products.