End-Sept tax effort declines

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    Fuelling the economy. Much-needed revenues will not only fund the government’s COVID response but will also fund key infrastructure projects. (Photo by RHOY COBILLA)

    The country’s tax effort fell by 0.4 percentage point (ppt) in the first nine months of the year as collections of revenue-generating agencies weakened amid the coronavirus disease 2019 (COVID-19) pandemic-induced crisis.

    The Department of Finance (DOF) said yesterday the tax effort in January to September dropped to 14.5 percent from 14.9 percent, due to lower collections from the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and other offices.

    Tax agencies were unable to collect what was programmed, particularly in the second quarter when strict quarantine measures were implemented. While restrictions have eased, economic activity remains limited leading to lower tax collections so far this year.

    Tax revenues dropped by 11.3 percent as BIR collections slid by 9.9 percent and BOC collections by 15.3 percent, the DOF said. Other taxes, which include motor vehicle taxes and forestry charges dropped by 27.6 percent.

    The government has revised its projected revenues this year amid the weak collections.

    Meanwhile, the revenue effort inched up by 0.1 ppt from 16.6 percent in 2019 to 16.7 percent in 2020, even as revenues dropped by 7.9 percent in the first three quarters of 2020.

    “The fiscal reforms adopted by the Duterte administration, including tax reforms and the utilization of idle savings in the public sector, boosted the revenue effort to the highest first three quarters’ level in history,” the DOF said.

    “These reforms have made the country one of the six strongest emerging economies to meet the challenges of the pandemic,” it added.

    The DOF said non-tax revenues rose by 21.6 percent due primarily to higher dividend remittances and repayment of interest and advances by government-owned and -controlled corporations.

    The Bureau of the Treasury’s (BTr) income also soared to P201.6 billion, almost twice the P118.6 billion earned in the same period last year.

    “BTr receipts benefited from robust collections of dividend remittances on national government shares of stocks which compensated for the decline in the share in profits from the Philippine Amusement and Gaming Corp.,” the DOF said.

    “The Bayanihan to Heal as One Act also empowered the President to reprogram, reallocate and realign unutilized funds from government entities to finance programs to counter the COVID-19 pandemic,” it added.

    Meanwhile the expenditure effort rose to 23.6 percent, 4.8 ppts higher than the 18.8 higher recorded in the same period last year.

    Actual expenditures rose by 15.1 percent to P3.02 trillion to support programs to counter the COVID-19 pandemic.

    “Prudent debt management has led to P15 billion in savings from interest payments that rose to P313 billion, 4.6 percent below the original program of P328 billion for the first three quarters,” the DOF also, said.

    “The growth in expenditures led to a higher national government deficit which settled at 6.9 percent of gross domestic product (GDP). This is almost a half of the projected deficit (P1.298 trillion equivalent to 10.1 percent of GDP) for the period,” the agency said. (A. Celis)