RVAT revenues reach P61.2 billion as of end-September

MANILA, Philippines - Revenues from the reformed value added tax (RVAT) amounted to P61.18 billion as of end-September 2009, still far from the full-year goal of P75.98 billion, latest data from the Department of Finance (DOF) showed.

Officials said revenues from the RVAT have been dwindling because of the general slowdown in the economy.

The government was counting on the RVAT to shore up state revenues but because of the weakness in the economy and lower oil imports last year, it was not able to collect more from the controversial tax.

The RVAT law, passed in 2005, raised the sales tax to 12 percent from 10 percent and lifted exemptions on oil and petroleum products despite stiff opposition from consumers and cause-oriented groups.

The new VAT law also increased the minimum corporate income tax to 35 percent from 32 percent, but this has been reduced to 30 percent last year.

In 2008, the government raised P121.14 billion from the RVAT law or P32.21 billion higher than the P88.93 billion collected in 2007.

This year, the government expects RVAT revenues to hit bottom if pending legislative measures that threaten to erode revenues are approved by Congress.

According to DOF estimates, the government expects to incur a P17-billion shortfall in its 2010 RVAT collections from the projected P78.9 billion for the year.

This as the government expects losses of roughly P49.5 billion a year from nine measures pending in Congress.

These measures include the bill seeking the creation of special economic zones in Bataan, Ilocos Sur, Cebu, Davao and Samal (revenue loss of P15 billion); the bill reducing the National Government’s share from royalties from indigenous energy sources to effect a reduction in electricity rates (revenue loss of P14.9 billion); the bill seeking to reimpose franchise tax on power distribution (revenue loss of P7.1 billion) and the bill seeking to exempt from income and other taxes the so-called real estate investment trust (P5.3 billion).

Other “negative revenue measures” include the proposal to exempt hybrid vehicles from excise tax and VAT which is expected to translate in losses of P2.7 billion, the abolition of premium tax on life insurance policies which has an estimated revenue loss of P1.8 billion and the abolition of documentary stamp tax (DST) on dollar remittances from overseas Filipinos which has an estimated revenue loss of P1 billion.