(Update) BIR misses P67-B tax collection target in 2008


Posted at Feb 24 2009 06:33 PM | Updated as of Feb 27 2009 09:14 PM

The Philippines' main revenue agency missed its 2008 target by a new record high, highlighting the government's fiscal vulnerability amidst the global economic slowdown.

The Bureau of Internal Revenue (BIR) said it fell P67 billion short of its tax collection goals in 2008.

BIR commissioner Sixto Esquivias, in an interview with reporters Tuesday, said the agency managed to collect only P778 billion of the P845 billion programmed collection for last year.

In 2007, the BIR missed its collection goal by P52.2 billion. The BIR was tasked to collect P845 billion then, but the Finance Department lowered the assessment to P810 billion due to the global economic slowdown.

While the actual tax collections in 2008 exceeds 2007's P713 billion collections, BIR's ability to meet its goals for a period is considered a key guage of the government's fiscal

BIR's tax collections account for about three-fourths of the government's total revenues, which in turn funds government's social services and pays the salaries of public officials, among others.

To cushion the local economy from the impact of the global economic slowdown, especially on jobs, the government has proposed a P330 billion stimulus package. Bulk of that amount depends on government's own revenues. The government will have to increase its borrowings from local and international investors and foreign lenders to plug the deficit.


Esquivias blamed the slackening economy as well as the tax relief package for minimum wage earners for missing its target in 2008.

Esquivias assumed the top post at the agency only last November 2008.

The BIR chief cited the implementation of the tax relief law under Republic Act 9504 that exempted minimum wage earners from withholding tax and raised the exemptions of individual taxpayers.
“We are still feeling the impact of the increase in personal deductions and exemption of minimum wage earners. I understand there have been are a lot of closures of establishments and naturally it will affect our collections from withholding taxes,” he added.
The growth of the country’s domestic output as measured by the gross domestic product slackened to 4.6 percent last year after zooming to its highest level in 31 years when it expanded by 7.2 percent.
Due to adverse external developments brought about by high oil and food prices as well as the global financial crisis, the Philippines has decided to abandon its commitment to balance the budget last year and postpone fiscal consolidation back to the original 2010 schedule.

Wider deficit
For 2009, the BIR is tasked to collect P968.3 billion. The Finance Department, however, expects the tax agency to collect only P915 billion due to the economic slowdown.

As more economic data flows in, finance officials said the government is staring at a wider deficit of P178 billion, which is about 2.2 percent of the gross domestic product (GDP). This is a big jump from the previous budget deficit of just one percent of GDP last year.