The Bureau of Internal Revenue (BIR) faces a challenging path to hitting its P3.23-trillion full-year collection target, as the agency contends with high goals set against slower-than-expected economic growth, rampant illicit trade and operational constraints.
BIR Commissioner Romeo Lumagui Jr. said the agency met its first-half collection goal, but hitting the full-year target will be “challenging.”
“The goal is really high, and it was set based on a 6-percent GDP growth assumption. But with GDP now tracking at 5.4 percent, that gap alone creates a major shortfall,” Lumagui said on the sidelines of the Combatting Illicit Trade in Southeast Asia forum on Tuesday.
He said even a 0.1-percentage point difference in GDP growth could significantly impact tax projections when dealing with multi-trillion-peso targets.
Lumagui also pointed to the persistent problem of illicit trade, particularly in tobacco and vape products, as a major source of revenue leakage.
“For tobacco alone, it’s hard to estimate because of the shift in consumer preference and the rise of vaping. But we know it’s significant,” he said.
While exact figures are unavailable, Lumagui described the losses as “substantial” and running into “billions per quarter.” He stressed the need for stronger enforcement and monitoring systems.
The BIR is awaiting the Department of Finance’s approval for a new QR-based track-and-trace system to combat smuggling.
Another factor affecting the outlook is the impact of health-driven policies, such as efforts by the Department of Health to reduce smoking and vaping. While aligned with public health goals, these efforts are expected to further dampen excise tax collections.
Lumagui said the agency continues to rely on support from law enforcement and is awaiting the release of funds to establish product testing laboratories critical to enforcement.
Despite these headwinds, Lumagui said the BIR is banking on new revenue streams, including a recently implemented tax on non-resident foreign digital service providers, to help offset potential shortfalls.
