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‘Sin’ taxes raise BIR collections

19 July 2018

Thanks to the higher and new taxes slapped on the so-called sin products and sugary drinks under the Tax Reform for Acceleration and Inclusion (TRAIN) Act because the Bureau of Internal Revenue (BIR) exceeded its target collections in the first half of 2018 by 13 percent.

BIR Commissioner Caesar B. Dulay said the agency collected P967.4 billion from January to June, up 13 percent from P853.6 billion in the first six months of last year.

The BIR also surpassed its end-June collection goal of P938.7 billion by 3 percent, Dulay added.

In June alone, the BIR’s tax collection rose 4 percent to P136.9 billion from P132.2 billion a year ago.

The actual collections last month were almost 1 percent more than the P135.7-billion target, Dulay said.

He attributed the strong six-month performance to a combination of improved tax administration and performance of revenue personnel as well as the higher levies under the TRAIN Law.

For this year, the BIR was tasked to collect P2.074 trillion, equivalent to 11 percent of gross domestic product.

Last year, the BIR’s collections grew 13 percent to P1.772 trillion from P1.567 trillion in 2016, although 1 percent below the P1.783-trillion goal.

President Rodrigo Duterte signed the TRAIN law last December. It raised in January the excise taxes on cigarettes, sugary drinks, oil products and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000.

The excise tax on sugar sweetened beverages, for instance, was a new levy, hence a fresh source of revenues, Dulay noted.

He said the new taxes on consumption compensated for the lower personal income tax rates under the TRAIN Law, which pulled down income tax collections so far this year, without disclosing by how much.

During the first half, the “big-ticket” sources of tax revenues were cigarettes and sugary drinks, Dulay said.

Under the TRAIN Law, the unitary excise tax slapped on cigarettes rose to P32.50 per pack effective Jan. 1 from P30 a pack last year.

Starting July, the cigarette excise tax further increased to P35 per pack, as mandated under the TRAIN Law.

Dulay said implementation of fuel marking by yearend as well as higher excise taxes on alcoholic drinks under the proposed tax package “2+” of the Department of Finance were expected to further shore up government revenue collections.

The taxes on petroleum and ‘sin’ products had consequently increased prices of basic consumer goods, thereby eroding the purchasing power of consumers.

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