Customs' VAT collection up 30% in 2008

MANILA, Philippines - The Bureau of Customs’ incremental value added tax collections in 2008 went up by more than 30 percent because of higher oil prices in the world market in the early part of last year.

In his accomplishment report for 2008, Customs Commissioner Napoleon Morales said that incremental revenues arising from the implementation of Republic Act 9337 or the Expanded Value Added Tax Act of 2005 reached P74.7 billion last year, or P17.5 billion higher than the P57.2 billion collected in 2007.

The agency exceeded the target of P64.6 billion by a little over P9.1 billion, he added.

Morales attributed the higher VAT collections to higher prices of crude last year. Prices of oil in the world market skyrocketed last year, hitting a record high of $147 per barrel in July. It is now at about $40 per barrel.

The BOC collected P60.98 billion from the lifting of the exemption of crude, oil products, and coal from VAT and another P15.8 billion from the increase in the VAT rate to 12 percent from 10 percent.

In 2008, BOC collections rose by 24.5 percent to P260.7 billion last year from P209.4 billion collected the previous year. With the P260.7 billion in revenues, the BOC exceeded the full year target of P254.5 billion by P6.2 billion.

The feat, according to Morales, could be attributed to the weak peso against the dollar and more non-cash collections due to higher rice importations by the state-run National Food Authority (NFA).

Customs is tasked to collect P300.1 billion this year, up from P260.7 billion last year. However, the Department of Finance (DOF) believes that the agency should collect P317 billion this year due to the continued weakening of the peso against the dollar.

In the first month of the year, the BOC likely missed its collection target of P18.7 billion because of the general slowdown of business brought about by the global financial turmoil, officials have said. Morales said the difficult economic tide due to the financial meltdown that started in the United States would make it more difficult for the agency to meet the higher collections assessed by the DOT.

The Cabinet-level Development Budget Coordination Committee, the interagency group that sets the country’s macroeconomic assumptions, has scaled down economic growth targets this year to a range of 3.7 percent to 4.7 percent from the original target of 6.1 percent to 7.1 percent.

It has also revised its foreign exchange assumption to a range of 45 to 48 per $1 from a range of 42 to 45 to $1 due to the continued weakening of the peso against the greenback.

The DBCC also lowered its oil price forecast to a range of $75 per barrel to $90 per barrel from the original range of $115 per barrel to $125 per barrel due to stable prices in the world market.