Improved admin boosts gov’t tax effort—DOF

Government efficiency in collecting taxes improved in the first three-quarters of the year despite the absence of fresh revenue sources, data from the Department of Finance (DOF) said.

Finance Undersecretary and Chief Economist Gil S. Beltran said government’s improved tax administration, particularly the Bureau of Internal Revenue (BIR), has helped in boosting the country’s tax effort this year.

Data from the DOF revealed that government tax effort rose 0.2 percentage point in January to September to 14.2 percent.

At end-September, BIR’s tax effort improved to 11.3 percent from 10.6 percent last year, while the Bureau of Customs’ efficiency ratio stood at 2.8 percent from 2.9 percent.

Beltran said the improvement in BIR’s tax effort is due to better tax administration while the decline in Customs’ efficiency is attributable to lower collections from cheaper oil prices.

“Tax revenues rose by 6.4 percent with BIR collections rising by 7.9 percent, but Customs collections languished at 0.9 percent as oil taxes dropped due to lower international prices,” Beltran said in a statement.

“Net of oil taxes, Customs collections rose by 13.3 percent, likewise exceeding nominal gross domestic product (GDP) growth,” he added.

In the first nine-months of 2015, total government revenues grew by 12.6 percent, outstripping the 5.1 percent growth in nominal GDP. Both tax and nontax revenues outgrew nominal value of the economy.

Non-tax revenues during the period grew by 64.7 percent with the transfer to the Special Account in the General Fund of proceeds from the privatization of coconut levy-funded assets ( 60.1 billion), Beltran said.

Meanwhile, expenditures increased 12 percent, also exceeding GDP growth but the more robust revenue growth led to a 17.8 percent contraction in the national government budget deficit to 25.5 billion from 31.1 billion in the previous year.

“The exceptional increase in revenue collections led to the revenue effort rising from 15.7 percent last year to 16.8 percent, a 1.1 percentage point rise,” Beltran said.

The expenditure effort also rose by one percentage point to 17.1 percent, boosting GDP growth by that magnitude, as capital outlays rose by an estimated 0.3 percentage point.

Thus, the national government budget was in deficit by 0.27 percent of GDP, lower than the 0.34 percent deficit in 2014.

A combination of robust revenues and lower deficit led to the continuing drop in the debt-GDP ratio to 45.3 percent in September, an improvement from last year's ratio of 46.4 percent. Both domestic and external debt ratios to GDP decreased.

“Compared with the target deficit equivalent to two percent of GDP, the end-September actual deficit of 0.27 percent shall enable government to provide fiscal space to push economic growth to higher levels during the last quarter, even with the ongoing global financial volatilities and threats of El Niño phenomenon,” Beltran said.