DOF lines up counter measures in case EVAT freeze stays

The Department of Finance (DOF) will implement counter-measures to generate additional revenues by next month in case the Supreme Court (SC) decides to maintain the temporary restraining order (TRO) on the expanded value-added tax (EVAT) law.

Based on the plan drawn up by Finance Undersecretary Emmanuel Bonoan, they may have to carry out short-term measures that would raise some P10.15 billion for the government if the EVAT suspension stays.

Aside from earlier reported measures such as the imposition of an additional one percent across-the-board import levy which would generate potential revenues of P14.6 billion a year or P3.65 billion for one quarter, and the sale of PNB (Philippine National Bank) which could raise some P2 billion, the DOF sees five more measures that would generate revenues in lieu of the EVAT proceeds.

One of these new measures is the drawdown of P2 billion from the Marcos wealth escrowed in PNB and ruled conclusively by the SC as belonging to the Philippine government.

Bonoan also proposed to order the Bureau of Internal Revenue (BIR) to intensify collections based on two revenue regulations: on abating surcharges on non-declared and under-declared taxes and the no-audit-program.

The DOF official said they may also direct the BIR to intensify collection of the common carrier’s tax and excise tax on luxury goods.

The BIR, he said, could also enter into compromise agreements with banks on the documentary stamp tax on special savings accounts, which is seen to generate P2 billion in revenues if implemented.

Another possible measure, according to Bonoan, is the sale of the Bureau of Customs (BOC)-seized "Romellioutes jewelry" through an international auction which could raise potential revenues of about P500 million.

Bonoan has also drawn long-term measures which will basically involve new tax laws in case the SC strikes down the EVAT law as unconstitutional.

These long-term measures, another DOF official said, may be "much painful" compared to the EVAT impact, but these are expected to generate a total of P63.42 billion additional revenues.

Included in the long-term measures is the passage of rationalization of fiscal incentives that was passed by the lower House and is pending in the Senate ways and means committee, which could generate savings of P4.8 billion.

Also part of the proposed long-term measure is the pushing for the simplified net income tax which is still pending in Congress. This is seen to generate potential revenues of P15.48 billion.

Still another long-term measure is the pushing for the passage of excise tax on non-essential items, including softdrinks and packaged juices, which this could raise P5 billion in potential revenues.

The government, Bonoan said, might also be forced to push for the increase of excise tax on petroleum which will raise P29 billion.

Bonoan said the proposal to impose the controversial excise tax on text messages might also be revived. This particular proposal may raise revenues of P5 billion based on a tax rate of 10 centavos per message.

Moreso, he said the DOF might also be pushing for the amendment of common carrier’s tax on land transport, making rates higher. The proposed amendment may raise potential revenues of P4.14 billion.