Customs head says peso gains cut revenues

Reuters

Posted at Oct 14 2010 01:23 PM | Updated as of Oct 14 2010 09:23 PM

MANILA, Philippines - The country's second biggest tax agency, the Bureau of Customs, may lose P13 billion ($300 million) of revenue if the peso strengthens to 42 per dollar by year end, Commissioner Angelito Alvarez said on Thursday.

Duties and taxes are levied as a percentage of the value of imports, and the currency's strength -- it rose to a 2-½ year high of 43.18 on Thursday -- leads to a lower conversion of the dollar value of imports and therefore less revenues.

Customs has a revenue target of P280 billion this year, which includes a cash collection target of P241 billion. Despite missing its collection goals in August and September, Alvarez told reporters the cash collection target could still be met.

"There's still a chance because normally October and November are good months for us," he said.

The government, which took office at the end of June, raised the budget deficit forecast to P325 billion or 3.9% of GDP, a record in peso terms.