• Tax effort improves to 14.5% of GDP in Q1

The share of tax revenue to the country’s gross domestic product (GDP) rose to 14.47 percent in the first quarter, the highest first quarter tax effort ever recorded, the Department of Finance (DOF) reported yesterday.

In its latest economic bulletin, the DOF said the combined tax effort of the Bureau of Internal Revenue (BIR), the Bureau of Customs (BOC) and other offices in the first three months climbed by 1.03 percentage point to 14.47 percent from 13.44 percent in the same period in 2017.

“Tax effort...rose by 1.03 percentage point, from 13.44 percent to 14.47 percent, the highest first quarter tax effort ever achieved,” the DOF said.

According to the DOF, the higher tax effort last quarter was brought about by higher tax collections during the period, which grew by 18.2 percent to P567.1 billion from P479.9 billion a year ago.

The agency attributed this to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law and improved tax administration by the government’s tax collecting agencies.

Combined with non-tax collections, the DOF said the national government’s total revenue effort in the first quarter rose by 0.91 percentage point to 15.82 percent from 14.91 percent the same period last year.

The DOF said higher revenue in the first quarter – which grew by 16.4 percent to P619.84 billion from P532.4 billion – almost doubled the nominal GDP growth which registered 9.7 percent during the quarter.

On the other hand, expenditure effort during the period also increased by 2.73 percentage points to 19.96 percent from 17.23 percent last year.

“Expenditure effort rose by 2.73 percentage points to 20 percent, the highest first quarter expenditure effort since 2003, thus boosting its contribution to GDP growth,” the DOF said.

Disbursements during the period expanded by 27.1 percent to P782 billion, mostly due to the 40 percent increase in infrastructure and capital outlays.

As a result, the national government deficit in the first quarter settled at 4.1 percent of the GDP, higher than the three percent ceiling set by economic managers for the whole year.

According to the DOF, the additional fiscal space provided by the TRAIN, as well as improved tax administration enabled the government to boost investments, and ultimately propel economic expansion in the first quarter.

“Public construction expanded by 25.1 percent, boosting GDP growth by 0.4 percentage point while government consumption rose 13.6 percent, contributing incremental 1.4 percent to growth,” the DOF said.