Revenues have improved in the absence of new tax measures, the Finance department said over the weekend, giving the government—criticized for not spending enough—added leeway to boost economic growth in the final months of the year.
Tax collections as a percentage of gross domestic product (GDP) improved to 14.22 percent as of end-September, the Finance department said in its latest Economic Bulletin, picking up from 14 percent in the same period last year.
In absolute terms, tax revenue in the January-September period totaled P1.355 trillion, 6.4 percent higher compared to the year-ago level of P1.273 trillion. This, the department claimed, mirrored improvements in tax administration as no new tax measures had been implemented.
Overall revenues, meanwhile, were said to have risen by 12.6 percent in the nine-month period even as expenditures expanded by only 12 percent. As a result, the national government’s deficit stood at the equivalent of 0.27 percent of GDP, narrower than the 0.34-percent deficit posted a year earlier.
“Compared with the target deficit equivalent to 2 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 the El Niño phenomenon,” Finance Undersecretary Gil Beltran said.
Philippine economic growth accelerated to 6 percent in the third quarter from 5.8 percent three months earlier, with government spending and household consumption boosting domestic demand.
The National Economic and Development Authority said the third quarter, in particular, saw an improvement in the public sector’s performance, with government final consumption expenditure increasing from 3.9 percent to 17.4 percent. This was described as an indication that the state was overcoming spending bottlenecks that hampered first semester growth.
The Q3 expansion put the country in line for full-year growth of 6 percent, official said. This, however, is below the 2015 goal of 7 percent to 8 percent. Year to date, GDP growth improved to 5.6 percent.
Of the tax take for the January-September period, the Bureau of Internal Revenue accounted for the bulk at P1.074 trillion, a 7.9-percent increase from the P996 billion recorded a year earlier.
The Bureau of Customs collected P268 billion, a slight increase from the P265 billion generated a year earlier “as oil taxes dropped due to lower international prices.”
Other agencies, lastly, accounted for P12 billion, up 8.1 percent from the comparable period.
Government debt in relation to GDP dropped to 45.3 percent as of end-September from 46.4 percent a year earlier, the Finance department said, tracing the improvement to the combination of robust revenues and a lower government deficit.