THE TAX Reform for Acceleration and Inclusion (TRAIN) law was able to shore up a P12.5-billion net gain in the first quarter, the Bureau of Internal Revenue (BIR) said, largely due to collections from tobacco products and softer-than-expected revenue losses from lower withholding income taxes.
The BIR yesterday reported to the Congressional Oversight Committee on the Comprehensive Tax Reform Program that the law generated P39.1 billion in additional revenues offset by P26.6 billion in foregone collections in the first three months of the year, yielding a surplus of P12.5 billion.
This is better than the expected P3.2-billion net loss for that period, and is equivalent to 15.19% of the P82.3-billion full-year net gain the government is targeting.
“The balance is attributable to both the field performance, especially our reinforcement processes in our revenue regions,” said BIR Director Alfredo V. Misajon during the hearing.
“That is a positive note for us,” he added.
TRAIN or Republic Act No. 10963 reduced personal income taxes and estate and donor’s tax rates, but removed some value-added tax exemptions.
At the same time, it hiked excise tax rates for automobiles, minerals, tobacco, and fuel and imposed new levies on sugar-sweetened beverages and cosmetic procedures, among others.
The BIR said it recorded a loss of P23.34 billion in the first quarter from lower withholding income taxes, down from the P36.04-billion loss it initially expected.
Losses from the lower estate taxes also came in lower at P225.23 million versus the P361.72-million shortfall it expected.
Meanwhile, the donor’s tax yielded a gain of P61.06 million instead of the P376.2-million loss the BIR programmed.
However, this gain was slightly tempered by value-added tax collections that yielded a P3-billion loss against the targeted P4.21-billion net gain.
“Maybe this is just the temporary movement in our VAT system. Maybe because of the projected increase, some of the consumption has decreased,” Mr. Misajon explained.
Meanwhile, the additional revenues from tobacco products due to the TRAIN law yielded P14.97 billion, higher than the P686.02-million target and making it the largest contributor to the program’s net surplus.
“We noticed that although we increased the…excise tax on tobacco, we’ve seen that the consumption of tobacco has not been tapering off… Maybe it’s because we’re just in the initial months of implementation, and some of these manufacturers had an inkling of the increases in excise tax,” Mr. Misajon said.
The BIR chief noted that demand for cigarettes was front-loaded ahead of another tobacco tax hike come July as mandated by the TRAIN law.
Incremental gains from higher documentary stamp taxes stood at P8.72 billion, more than the P7.06-billion target.
However, TRAIN’s gains from petroleum, automobiles, sugar-sweetened beverages (SSB) — the third-largest contributor to the total — as well as coal, minerals and cosmetic procedures were all below target during the first quarter.
The take from petroleum came in at P4.73 billion that period against the P9.99-billion target; automobiles at P363.71 million versus the P673.66-million goal; SSB at P7.7 billion (versus P7.78 billion); coal at P305,000 (versus P116.62 million); minerals at P264.97 million (versus P440.46 million); and cosmetic procedures at P7,000 against the P14.95-million target.
Meanwhile, additional revenues from higher final taxes in the first quarter went above program, with foreign currency deposit unit taxes yielding P159.71 million versus the P99.72-million target, capital gains on non-trade stocks at P1 billion against the P777.07-million goal, and transactions of traded stocks at P1.12 billion versus the P409.4-million program.
However, the BIR has no estimate for the impact of tax administration measures so far, even though it expects these initiatives to have generated some P1.31 billion in gains in the first quarter. — Elijah Joseph C. Tubayan