Govt to lose P16 billion in revenues in 2011

THE Aquino administration is bracing itself for revenue-eroding measures that are set to take effect this year.

Data from the Department of Finance (DOF) revealed that for this year, the government is poised to incur P15.7-billion worth of revenue losses from laws enacted by Congress that would give fiscal incentives and other perks to investors and taxpayers.

“We are expecting two revenue-eroding measures to take effect this year,” Finance Undersecretary Gil Beltran said on Monday.

The Finance official was referring to Republic Act (ra) 9505, or the Personal Equity and Retirement Account (PERA) Law and RA 9856, or the Real Estate Investment Trust (REIT) Act.

On the PERA Law, there is an apparent deferment since the Finance department has not approved the Implementing Rules and Regulations of this law, while the REIT Act has been put on hold as Finance Secretary Cesar Purisima wants investors falling under the law to increase public floatation to 51 percent from only 33 percent.

“If these laws would end all the deadlocks soon, then it would translate to P15.7 billion in forgone revenues on the part of the government,” Beltran said.

The PERA Law is seen to reduce the government’s coffers by P12 billion, while the REIT Act would bleed by another P3.7 billion.

In 2010, government’s forgone revenues amounted to P41.8 billion because of 16 laws that gave tax incentives to individual and corporate taxpayers.

These laws include Association of Southeast Asian Nations (Asean) Trade in Goods Agreement (P9 billion), Corporate Income Tax Rate Reduction (P5.8 billion), RA 9593, or the Tourism Act (P6 billion), Zero Tariff rate on oil (P5.1 billion), the establishment of Bataan and Aurora Freeport Zone (P3 billion each), Reduction of Premium Tax on Life Insurance to 2 percent (P1.3 billion) and the Documentary Stamp Tax Exemption on Secondary Trading (P1.4 billion).

Two years ago, the government suffered P62.6 billion in revenue losses from Corporate Income Tax Reduction (P21.7 billion), conversion of value-added tax on power transmission to franchise (P9 billion), Japan-Philippine Economic Partnership Agreement (P2.8 billion) and the Biofuels Act (P200 million).

For 2011, the economic team of President Benigno Aquino 3rd will push two major measures—rationalization of fiscal incentives bill that is aimed at offsetting adverse impact of revenue-eroding measures that Congress enacts into laws and the fiscal responsibility bill, which would empower the executive branch to interfere on the bills that would pose prejudicial impact as to the executive branch’s power to tax with respect to laws that Congress would pass. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times