BIR slashes 2010 target to P850 billion

MANILA, Philippines - The government has slashed the 2010 collection target of the Bureau of Internal Revenue (BIR) to a range of P800 to P850 billion from P875 billion previously.

“That is the evolving target,” BIR Commissioner Joel Tan-Torres told reporters yesterday. The Development Budget Coordination Committee (DBCC), the interagency group that sets the country’s macroeconomic assumptions, arrived at the figures during a meeting last week.

Tan-Torres blamed the implementation of “revenue-eroding” measures for the cut in next year’s revenue goals, particularly the lowering of the corporate income tax rate to 30 percent from 35 percent.

The lower income tax rate took effect in January which is expected to translate to losses of P15 to P20 billion yearly.

Tan-Torres said the Minimum Wage Law which exempts minimum wage earners from income taxes will translate to losses of P26 billion a year.

For 2010, the BIR chief said the agency also expects losses from the implementation of the so-called Personal Equity Retirement Account (PERA) Act of 2008. PERA is a tax-free pension scheme for retiring individuals and is estimated to cost the government P7 billion yearly.

This year, the BIR expects to collect only P742 billion, which is P56 billion lower than the P798 billion target for 2009 because of the impact of the global financial crisis and the effects of typhoons Ondoy and Pepeng which slowed down business activities.

As of end-November 2009, the BIR collected only P681.9 billion, 5.5 percent lower than the P721.6 billion collected a year ago.

In November, the BIR collected only P70 billion, down by 8.8 percent compared to the P76.7 billion recorded last year.