THE government expects to raise P101.42 billion next year from its fiscal measures but projects this will go down to P67.07 billion by 2023.
Based on the 2022 budget document, the expected revenues next year from fiscal measures will be 63.9 percent higher than the programmed P61.88 billion this year.
For 2022, the Tax Reform for Acceleration and Inclusion (TRAIN) law is seen to generate P169.85 billion, up by 7.5 percent from P157.94 billion program this year.
On top of this, “sin” tax laws will also give the government P52.33 billion in revenues, a 21.4-percent jump from this year’s P43.1-billion program.
However, these revenue gains will be offset by the losses from the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) and the Financial Institutions Strategic Transfer (FIST) Act amounting to P118.79 billion and P1.97 billion, respectively.
The expected revenue loss next year from CREATE is lower than this year’s projection of P138.19 billion.
On the other hand, the foregone revenues for FIST law in 2022 are bigger than the P995-million projection for this year.
By 2023, revenues from fiscal measures are expected to settle at P67.07 billion, dropping by 33.9 percent from P101.42 billion projected in 2022.
Revenue take from TRAIN law will settle at P117.98 billion, lower by 30.5 percent compared to the 2022 projection.
Finance Undersecretary Maria Teresa Habitan told the BusinessMirror the expected decline in revenue collection from TRAIN law in 2023 is due to the implementation of relatively lower personal income tax (PIT) rates in 2023.
“In 2023, the second tranche of PIT adjustments under the TRAIN Law will take effect,” Habitan said in a message.
Revenues from sin tax laws in 2023, however, are seen to rise to P66.99 billion, higher by 28 percent compared with P52.33 billion in 2022.
Smaller revenue loss
Meanwhile, the government projects losing P115.01 billion under the CREATE law, which is smaller than the projected P118.79 billion foregone revenues because of the program by 2022.
Touted by the DOF as the “largest fiscal stimulus to firms in recent history,” the CREATE law is expected to provide P1 trillion in tax relief to businesses in 10 years.
The law also cuts the regular CIT rate by 10 percentage points, from 30 percent to 20 percent, for domestic corporations with a taxable income of P5 million and below, and with total assets of not more than P100 million.
Domestic corporations that earn a taxable income above P5 million benefit from an immediate reduction of the CIT rate from 30 percent to 25 percent. Foreign corporations currently paying the regular rate will also enjoy a reduced 25-percent CIT rate.
As for the FIST law, it is seen to dent revenues by P2.89 billion in 2023, bigger than the projected P1.97 billion foregone revenues in 2022.
Seen to cushion the impact of the pandemic on the financial sector, the FIST bill allows financial institutions to offload nonperforming assets (NPAs) by selling them to asset management firms so they could lend more to pandemic-hit businesses.
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