Nov 252016

MANILA, Philippines – There was little to no improvement in revenue collections during the first three months of the Duterte administration when compared to economic performance because of transition, government data showed.

For the first nine months, national government revenues accounted for 13.2 percent of gross domestic product (GDP), down from 13.9 percent a year ago.

Broken down, taxes cornered 11.8 percent of GDP, just slightly above 11.7 percent last year. The targets for the year are 15.5 and 14.1 percent, respectively.

The figures represent the revenue and tax efforts of the government which reflect the amount of revenues collected as the economy expands.

Theoretically, more revenues should be collected as economy grew faster at seven percent as of the third quarter. But Finance Assistant Secretary Ma. Teresa Habitan said this was not the case.

“We should give chance to the new government to perform,” Habitan said in a phone interview yesterday.

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“This is still because of transition,” she added.

Emilio Neri Jr., lead economist at Bank of the Philippine Islands, agreed. “Three months is too soon to be able to say they are in normal mode already,” Neri said by phone.

By agency, collections by the Bureau of Internal Revenue (BIR) accounted for 9.4 percent of economic output from 9.3 percent a year ago.

The Bureau of Customs, meanwhile, posted a similar 2.3 percent revenue effort for the period, data showed.

Both Habitan and Neri agreed that BIR is a key agency to watch for considering it accounts for more than 80 percent of tax revenues.

“There is really no gauge by how much you should collect, but compared to our neighbors like Thailand, we should be able to collect more,” Habitan said, citing higher value-added tax (VAT) in the country but same VAT revenues to Thailand.

Neri, for his part, said BIR should have collected more during the first three months of President Duterte.

“Oil prices bounced back this year from last year so there should have been better VAT collections on oil as well as other taxes in Customs,” he said.

“But so far, it has not translated to a significant improvement in revenues,” Neri said.

Instead, Neri said the Duterte government “kept true to its word” to spend more with 14.9 percent disbursement ratio and a deficit accounting for 1.7 percent of GDP.

In the same period last year, spending was at 14.08 percent, while deficit was only 0.22 percent. The deficit cap for the year is set at 2.7 percent.

“They really learned to spend faster than to collect (revenues). They really spent quickly,” Neri said.

He however warned that while spending fast is good, revenues should catch up as this may result into budget constraints. “Maybe some time should be given to observe if the shortfalls are really as a result of adjustment,” he said.

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