Sliding oil prices depress BIR, Customs collections

MANILA, Philippines - The government continued to post lower collections last month due to depressed oil prices.

Preliminary government data showed collections by the Bureau of Customs fell by 7.5 percent to P26.9 billion in August. This was 25 percent short of the P35.9 billion target for the month.

In a statement obtained by The STAR, the Customs bureau blamed its dismal performance on the continued drop of oil prices.

The price of fuel has plunged by nearly 20 percent in value since hitting a peak amid a short recovery in June. Lower oil import values slash revenues from levies paid by importers.

According to the BOC, value of oil shipments dipped by 31.4 percent year-on-year to P4.9 billion.

Sought for comment, Alvin Ang, an economist at Ateneo de Manila University, said the drop in oil prices should have been tamed by a weak peso which increases the value of imports.

 “How could revenue go down when it’s a specific tax? Demand even increased. Technically, depreciation is like an automatic stabilizer for oil revenues if demand falls,” Ang said in an e-mail yesterday.

The BOC said while import volume rose by 20.6 percent in August, oil prices . fell by 43.1 percent.

As for the Bureau of Internal Revenue, excise tax collections from petroleum products went up to P6.71 billion in the first seven months from P5.63 billion in the same period last year.

In July alone, the BIR collected P1.08 billion from oil, down from the average of about P2 billion a month for the past eight years.

The share of oil in total BIR collections has also gone down. From 2007 to 2014, the share of excise collections from oil slid to 0.7 percent from 1.4 percent.  

The government argued that potential revenue losses from measures seeking to lower income tax rates should be offset by higher taxes on other sources.

What is being explored is an increase in value-added tax but oil levies have also surfaced owing to the drop in oil prices in the world market.

Ang, however, said oil taxes “should be left on their own.”

 “That’s also difficult because it is going to affect welfare. Oil should be left on its own. Customs should be left to facilitating movement of goods rather than revenue collection,” he explained.