Economy 3 MIN READ

Revenues up 11% but slow spending a concern

June 26, 2023By BusinessWorld

Government revenues rose by 11% in the first five months of the year, but Finance Secretary Benjamin E. Diokno said that underspending remains a concern. 

Data from the Department of Finance (DoF) showed revenue collections jumped by 10.83% to PHP 1.59 trillion in the January-to-May period, from PHP 1.44 trillion recorded in the same period a year ago.

“I think for the full year, we will surpass our target,” Mr. Diokno said in a press chat on Friday.

BSP survey: Filipino consumers to spend less in Q3The government is targeting to raise PHP 3.729 trillion in revenues, equivalent to 15.2% of gross domestic product (GDP).

For the January-to-May period, DoF data showed tax revenues rose by 9.71% year on year to PHP 1.41 trillion. Collections from the Bureau of Internal Revenue (BIR) went up by 9.95% to PHP 1.05 trillion, while the Bureau of Customs (BoC) saw collections jump by 12.1% to PHP 359.3 billion.

Mr. Diokno said the improvement in revenues was due to the “over-collection” by Customs and the government’s privatization efforts.

Meanwhile, nontax revenues jumped by 20.56% to PHP 178 billion in the January-to-May period from PHP 147.4 billion a year ago. Nontax revenues from other offices surged by 48.95% to PHP 95.8 billion, offsetting the 1.34% drop in revenues from the Bureau of the Treasury (BTr).

“On the nontax revenues, the BTr’s (collections) were almost flat. For other offices, this might be from privatization,” Mr. Diokno added.

However, Mr. Diokno expressed concern over the government’s sluggish spending.

“I’m concerned with the performance of the government. They are slow to spend. The Department of Budget and Management (DBM) is quick to release, but agencies are not spending fast enough and that will impact performance,” he said.

“We’re collecting more revenues than forecasted, but agencies are underspending. For the fiscal conservative, that’s nice, but not necessarily good for a developing country. We are trying to pick up (spending), to make up for that pandemic. It’s not a lack of money, it’s the ability to perform,” he added.

Data from the DBM showed that government agencies’ budget utilization rate was at 91% at end-May, slower than the 93% a year earlier.

The DoF did not provide data on government spending in the January-to-May period.

Still, Mr. Diokno said the government’s fiscal gap remains below target. The government’s deficit ceiling is set at 6.1% of GDP or PHP 1.499 trillion this year.

The National Government’s (NG) budget deficit narrowed by 34.57% to PHP 204.1 billion as of end-April from the PHP 311.9-billion gap a year earlier.

The Finance chief said that improved tax administration will help boost revenues. He said that the government is “constantly looking for additional tax measures,” citing the proposed tax on sweet and salty food and beverages, the tax on single-use plastics, and a carbon tax.

However, Mr. Diokno did not recommend the imposition of a wealth tax.

“It’s difficult to define the wealth tax. I’d rather tax what you take away from society than what you contribute. Your income, that’s your contribution to society,” he said.

“Those who consume a lot or take away a lot of resources, they should be the ones taxed. The value-added tax (VAT) is the most popular tax globally, because that’s fair. Our VAT system is better than most, because food in its original state is VAT-free,” he added.

He also noted that the proposed military and uniformed personnel pension reform, the Maharlika Investment Fund, and the government’s rightsizing plan would help increase fiscal space to “address the more pressing problems.” — Luisa Maria Jacinta C. Jocson, Reporter

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