DOF: Collections from tax reform measures exceed targets in 2021

The Philippine government raised more money from tax reform measures last year than it had projected, according to the Department of Finance (DOF) on Tuesday.

Data released by the DOF showed that the government collected P228.6 billion from the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the Tax Amnesty Act, and the Sin Tax Reform laws.

TRAIN revenues were P171.1 billion, 8.3% higher than the target of P157.9 billion; sin tax measures raked in P52.9 billion, 22.7% higher than the goal of P43.1 billion; and tax amnesty brought in P4.6 billion.

The total yearly collection was 13.7% above the target, bringing the total collection for the years 2018 to 2021 to P575.8 billion.

“[T]he passage and implementation of these tax reform laws, along with the subsequent Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, make President Duterte’s (comprehensive tax reform program) almost 90% complete,” the DOF said.

TRAIN was signed into law by President Rodrigo Duterte in December 2017, lowering personal income tax rates and broadening the value-added tax (VAT) base beginning in January 2018.

The Bureau of Internal Revenue earlier this month said first-quarter collection stood at P485.4 billion, or P47.2 billion (8.9%) lower than the Development Budget Coordination Committee’s (DBCC) target of P532.6 billion.

The shortfall was attributed to businesses utilizing their input VAT credit on purchases available to them under the TRAIN Law.

Moving forward, the DOF said the incoming administrations will have to raise P249 billion in additional revenues in the next 10 years to pay off the P3.2 trillion in additional debt incurred due to the COVID-19 pandemic.

The outgoing Duterte administration has proposed a fiscal consolidation plan, which would raise an average of roughly P284 billion annually. This includes the additional taxes and the deferment of the further reduction of personal income tax rates.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno, who will lead the DOF in the incoming Marcos administration, said he will look into the proposals, adding his first focus will be on debt sustainability.

The national government’s debt climbed to a record-high P12.68 trillion as of the end of March, given the continuing borrowing efforts to boost the war chest against the pandemic. —VBL, GMA News