Gov’t says on track with fiscal targets as tax take grows

MANILA, Philippines – The Aquino administration is on track to meeting its fiscal targets this year as its revenue collections continued to improve together with the economy, according to the finance department.

Data from the agency showed the government revenues accounted for 14.9% of the country’s first-quarter economic output or gross domestic product (GDP), which grew by a faster-than-expected 6.4%.

The revenues-to-GDP ratio surpassed the 14.4% recorded in 2011, which is also the target this year.

Tax collections, which accounted for most of the revenues, contributed 12.5% to GDP during the first three months, also higher than last year’s 11.8%. The 2012 target for the tax-to-GDP ratio is 13.2%.

“Our sustained focus on improving tax administration efficiency continues to bear fruit. We believe that as we move toward the latter part of the year, we will continue to see better results on the part of revenue agencies as reforms are continued to be undertaken,” Finance Secretary Cesar Purisima said.

Higher revenues helped contain the country’s budget deficit as of end-March. The deficit amounted to P33.909 billion, accounting for only 0.8% of GDP, as against last year’s 1.2%. The ceiling for 2012 is 2.6%.

The comparison of deficit, revenue and tax collections against GDP growth provides a clearer view of how much the government is collecting to support the economy and lessen its borrowing needs. The rationale is as the economy expands, more revenues are collected by the government.

The Bureau of Internal Revenue (BIR), which accounts for about 70% of tax revenues, improved collections to 9.5% of GDP in January to March 2012, from 8.9% in the comparable period last year. The agency aims to hit 9.8% revenue ratio by the end of this year, higher than the 9.5% last year.

The Bureau of Customs, meanwhile, notched a 2.9% revenue-to-GDP ratio, inching up from 2.8% last year. It has a full-year target of 3.4%, higher than its last year’s performance of 2.8%.

“Double-digit collection growths posted by BIR and Customs are way faster than how the economy expanded in the first quarter, leading to better revenue efforts for both bureaus,” Purisima explained.

As of March, BIR collections rose 14.8% to P229.044 billion as against P199.549 billion last year. Customs, on the other hand, nudged an 11% uptick during the same period, raising a total of P69.529 billion, up from P62.618 billion.

As a result, the budget deficit of P33.909 billion was well below the P82.808 billion cap for the period.

In the first quarter, the economy, as measured by GDP, grew 6.4%, the second-fastest in the region, next to China, and the strongest the government has seen in almost two years. The growth was driven mainly by the increase in exports and a strong services sector, which got a boost from high tourist arrivals.

“During the first quarter, the economy expanded by more than expected despite a narrower deficit. We are committed to continuously pursue a faster, sustainable and inclusive growth while being mindful of our fiscal consolidation process,” Purisima said. – Rappler.com