The national government’s tax effort slipped in the first nine-months of the year after the coronavirus-induced crisis dragged down the Bureau of Internal Revenue (BIR) and Bureau of Customs collections.
Finance Undersecretary Gil S. Beltran, said that tax effort, or the share of the actual tax collections to gross domestic product (GDP), dropped by 0.4 percentage point at end-September to P14.5 percent from 14.9 percent a year ago.
Beltran attributed the decline on weaker tax revenues, which decreased by 11.3 percent to P1.865 trillion in January to September this year from P2.090 trillion in the previous year.
Collections of the BIR, the agency responsible for more than 70 percent of government’s income, declined by 10 percent to P1.444 trillion at end September from P1.603 trillion a year ago.
Likewise, Customs revenues fell by 15 percent during the period to P398 billion from P470 billion in the first nine-months of 2019.
Data from the Department of Finance (DOF) showed the tax effort ratios of the BIR and Customs both slipped to 11.3 percent and 3.1 percent, respectively.
Other tax collections that include motor vehicle levies and forestry charges also fell by 27.6 percent in the first three-quarters.
Meanwhile, revenue effort of the national government slightly improved in January to September due to higher dividends from state-owned and -controlled corporations.
The ratio between the country’s nominal GDP and total revenues of the government inched up by 0.1 percentage point to 16.6 percent from 16.7 percent in the previous year due to non-tax revenues.
“Non-tax revenues rose by 21.6 percent due primarily to higher dividend remittances and repayment of interest and advances by GOCCs ,” said Beltran, the DOF chief economist.
At end-September, the Bureau of the Treasury (BTr) income soared to P201.6 billion, almost twice the P118.6 billion earned in the same period last year.
“BTr receipts benefited from robust collections of dividend remittances on national government shares of stocks which compensated for the decline in the share in profits from PAGCOR ,” Beltran said.
The government’s expenditure effort also rose by 4.8 percentage points to 23.6 percent from 18.8 percent in the same period last year.
The robust expenditure effort, however, led to a higher national government budget deficit of 6.9 percent of GDP, but less than half of the fiscal gap ceiling for the period of 10.1 percent.