Gov't lost P112 B due to revenue eroding measures, says Purisima

MANILA, Philippines -  Revenue amounting to anywhere from P107 billion to P112 billion have been lost because of revenue-eroding measures implemented from 2009 to 2010, Finance Secretary Cesar Purisima said during a budget hearing at the Senate.

Of the amount, the government lost P73.40 billion to P78.40 billion from measures implemented in 2009 and P33.97 billion from measures implemented in 2010.

While the amount of estimated revenues that were lost last year was smaller than the amount recorded in 2009, Purisima said this still dampened revenues.

From 2008 to 2009, revenue-eroding measures translated to losses of P73.40 to P78.40 billion, estimates by the Department of Finance (DOF) showed.

For last year, the government estimates to have lost P33.97 billion from seven measures, which had a negative impact on revenues. These are the Real Estate Investment Trust (REIT) Law; the law providing value added tax (VAT) exemption of selected goods and services purchased by senior citizens; the measure provide tax deductibility of actual free legal services rendered by lawyers or professional partnership of the poor; the law restructuring the documentary stamp tax on life insurance policies and reduction of premium tax on life insurance policies; the Migrant Workers and Overseas Filipino Act which abolished the documentary stamp tax on overseas Filipinos; the law which exempted local water districts from income taxes and the law which created special economic and Freeport zones in Aurora.

Of the P33.97 billion, various tariff reduction programs implemented last year, accounted for P23.32 billion in lost revenues, data from the DOF showed.

Purisima said during the hearing that since the Aquino administration took office in July last year, revenues increased largely because of tax administration measures.

“Tax administration was the main factor that drove revenues up. During the first 12 months, tax administration measures generated P73.94 billion in additional revenues of which P54.86 billion came from the Bureau of Internal Revenue (BIR) and P19.08 billion came from the Bureau of Customs (BOC),” Purisima said.

The impact of tax administration measures was estimated by computing the revenue impact of changes in macroeconomic indicators compared to the previous year, taking out the impact of revenue-negative measures and the impact of tax expenditure fund or (TEF).

The Finance chief said the government could have done better if not for the implementation of the revenue-eroding measures.

“We could have done better if not for the revenue-negative measures amounting to between P107 billion and P112 billion which were adopted late in 2009 and 2010. A total of P73.40 billion to P78.40 billion took effect before 2010 but P33.97B reduction took effect in 2010,” Purisima said.