revenues and social mitigating measures As of 14 August 2019 1 - PowerPoint PPT Presentation

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DOF update on tax reform for acceleration and inclusion (TRAIN) revenues and social mitigating measures As of 14 August 2019 1

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. Contents 1. Updates on TRAIN revenue performance 2018. 2. Overview of social mitigating measures under TRAIN. 3. Updates on each social mitigating measure. 2

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. 1. Preliminary data show that TRAIN revenues reached PHP 68.4 billion in 2018, compared to the full-year target of PHP 63.3 billion. a.Actual revenues are at 8.1 percent above target for the period. b.The total excess is PHP 5.1 billion pesos. c.The BIR exceeded target by PHP 10.6 billion, while the BOC was below target by PHP 5.5 billion. 3

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. 2. The biggest gains are seen in the personal income tax, auto excise tax, tobacco excise tax, and the documentary stamp tax (PHP 51.5 billion more). a. Losses from lower personal income taxes were originally projected at PHP 146.6 billion, but actual losses were lower at PHP 111.7 billion, or a gain of PHP 35 billion, due to better compliance, an increase in registered taxpayers, and an increase in jobs. b. Auto excise tax is above target by PHP 6.2 billion, due to higher purchasing power for imported vehicles. c. Tobacco excise is above target by PHP 5.6 billion, due to better compliance. d. Documentary stamp tax is above target by PHP 4.7 billion given higher transactions value and better collection efficiency. 4

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. 3. The biggest shortfalls are seen in the excise of sweetened beverages and VAT (PHP 43.4 billion less) • Sweetened beverage excise is short by PHP 11.9 billion as the industry claims that no high fructose corn syrup (HFCS) has been used since January 1, 2018. HFCS-sweetened beverages are taxed at PHP 12 per liter, instead of PHP 6 per liter. • The BIR is conducting an audit to ascertain this claim. At the same time, the FDA is also in the process of verifying if firms did submit applications to reformulate from HFCS to regular sugar. This is required before firms can legally market a new formulation. 5

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. 3. The biggest shortfalls are seen in the excise of sweetened beverages and VAT (PHP 43.4 billion less) • VAT is short by PHP 31.5 billion. • The main reason cited by the BOC is that there are only eight industries (power transmission, jewelries, and government instrumentalities namely the Philippine Sports Commission, Armed Forces of the Philippines, People’s Television Network, the University of the Philippines, the National Museum, and the Central Bank) that reported importation, which is now VATable. • On the other hand, the BIR reported that bulk of the VAT incremental revenue is attributed to the VAT on interest liabilities of the Philippine Deposit Insurance Corporation. 6

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. 3. The biggest shortfalls are seen in the excise of sweetened beverages and VAT (PHP 43.4 billion less) • However, accounting for the estimated second round consumption effects from the additional take-home pay, an additional PHP 24.6 billion, of which PHP 19.9 billion are VAT revenues, was collected in 2018. With the second round VAT revenues, the TRAIN VAT shortfall is reduced to just PHP 11.6 billion. • The shortfall in VAT is also evident in overall BIR VAT revenues, which declined by 2.0 percent and are short by PHP 68 billion in 2018, compared to target. One reason for this is the surge in imports that adds to input VAT claims in BIR, hence lower VAT revenues. DOF revenue operation group (ROG) and BIR are looking into the reasons for this overall low performance. 7

DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. Overall, TRAIN revenues exceeded its targets, providing additional public resources for infrastructure and human capital development programs. The DOF expects the performance to be sustained in the coming years. Actual to Actual Target Surplus/deficit Target ratio (%) Tax BIR BOC Total BIR BOC Total BIR BOC Total BIR BOC Total Excise 26.7 33.9 60.7 33.3 26.9 60.2 (6.5) 7.0 0.5 80.3 126.0 100.7 oil Excise 2.6 18.0 20.6 3.0 11.4 14.4 (0.4) 6.6 6.2 85.0 157.8 142.7 auto Excise 39.8 2.8 42.6 52.0 2.5 54.5 (12.3) 0.4 (11.9) 76.4 114.9 78.2 SSB Excise 9.9 NA 9.9 4.3 NA 4.3 5.6 NA 5.6 229.6 NA 229.6 tobacco Excise 2.4 1.2 3.7 2.9 1.1 4.0 (0.5) 0.2 (0.3) 83.0 117.5 92.2 others VAT 5.2 2.5 7.7 17.1 22.2 39.2 (11.9) (19.6) (31.5) 30.4 11.5 19.7 PIT (111.7) NA (111.7) (146.6) NA (146.6) 35.0 NA 35.0 76.2 NA 76.2 CIT 1.2 NA 1.2 0.5 NA 0.5 0.7 NA 0.7 248.7 NA 248.7 Financial 5.3 NA 5.3 7.4 NA 7.4 (2.2) NA (2.2) 70.8 NA 70.8 taxes DST 33.8 NA 33.8 29.1 NA 29.1 4.7 NA 4.7 116.2 NA 116.2 Estate (2.8) NA (2.8) (2.1) NA (2.1) (0.7) NA (0.7) (132.0) NA (132.0) tax Donor (2.6) NA (2.6) (1.7) NA (1.7) (1.0) NA (1.0) (159.0) NA (159.0) tax Total 9.9 58.5 68.4 (0.7) 64.0 63.3 10.6 (5.5) 5.1 1,398.4 91.4 108.1 Note: Excise products excluding mining include additional VAT collections. Totals may not add up due to rounding off. 8

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DRAFT FOR DISCUSSION. SUBJECT FOR CHANGE. Thank you 12 Photo: IRRI Photos: IIRI