MANILA, Philippines – The government is “on track” to meeting its debt and revenue goals, the Department of Finance (DOF) said, despite the first-quarter data showing new figures were actually lower than their previous year’s levels.
Revenue and debt ratios – which are important gauges for credit raters – were released yesterday, following the economic performance report that showed growth hitting 7.8 percent as of March.
For the first quarter, state revenues already accounted for 13.7 percent of economic output, lower than the 14.9 percent posted in the same period last year. The target has been set at 14.7 percent.
Of these, tax collections were equivalent to 11.92 percent, down from 12.5 percent, but on track to meeting the 13.5-percent target for the year.
Revenue and tax efforts gauge how much the government has collected as the economy expanded. Fast economic growth should mean higher revenues – and ratios – and vice-versa.
Finance Assistant Secretary Ma. Teresa Habitan, in an interview, downplayed the year-on-year decrease in figures.
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“It is too early to tell how our tax effort would turn out for the year based on just one quarter,” Habitan told The STAR.
“We are hopeful tax collections would eventually catch up with a buoyant economy,” she added.
By way of comparison, the economy grew 7.8 percent during the first quarter, while total revenues only inched up 0.9 percent.
Last Monday, the government said it attained a “record-high” budget surplus of P36.803 billion in April, driven highly by a double-digit increase in revenues. That allowed the four-month tally to rise seven percent.
In contrast to the revenue ratios, figures showed the national government debt has declined as a proportion of gross domestic product (GDP).
Debt-to-GDP ratio – which gauges the sustainability of state liabilities – dipped to 48.9 percent from 51.3 percent last year. The Aquino administration wants the ratio down to 48.4 percent in 2013.
The lower the debt figure, the better as it indicates the country has more than enough resources to settle its debts.
Habitan said the government is focused on “widening its tax base” by continuously pursuing tax administration measures and structural reforms through legislation.
Among others, she said the government will push for the rationalization of tax incentives and better revenue-sharing in the mining industry once the new Congress opens in July.
“The changes in tax policy measures – to collect more revenues – always have a place in fiscal policy,” Habitan said.