DOF: Higher tax take, public spending to fuel growth
In fourth-quarter
At A Glance
- The Department of Finance (DOF) expects sustained positive trends in tax collections and government spending to have a substantial impact on the country's economic activity.<br>Finance Secretary Benjamin E. Diokno stated that the ongoing stabilization of the country's debt-to-GDP ratio is indicated by lower budget deficits.<br>Improvement in tax revenue collections is expected in the fourth quarter of 2023 as economic activity increases during the holiday season.<br>The expected deceleration in inflation for the remaining months of the year could support consumption, a significant tax base.<br>The government's fiscal deficit saw a 2.9 percent improvement to P983.47 billion in the first three quarters of 2023 compared to the same period in 2022.<br>The deficit figure represents only 66 percent of the full-year program of P1.50 trillion.<br> The lower deficit outturn suggests the continued stabilization of the debt-to-GDP ratio and progress towards achieving fiscal targets.<br>Total revenues for the first nine months reached P2.84 trillion, a 6.8 percent increase from the previous year.<br> Total revenues collected account for 76.1 percent of the full-year revenue program of P3.73 trillion.<br>Taxes, particularly from the Bureau of Internal Revenue (BIR), contributed significantly to the revenues.<br>BIR collections for the first three quarters of 2023 slightly fell short of the program due to factors like reduced personal income tax and changes in VAT filing.<br>The Bureau of Customs' cumulative collection for the nine-month period exceeded the target by 2.5 percent.<br>Non-tax revenues also showed improvement, reaching PHP 296.5 billion, a 10.5 percent increase from the previous year.<br> Government underspending has decreased, with 73.1 percent of the full-year program already released.<br>Total expenditure for the first nine months of 2023 reached P3.82 trillion, a 4.2 percent increase year-on-year.<br>Increased expenditures are expected in the fourth quarter as government agencies implement catch-up plans.
The Department of Finance (DOF) said the sustained positive trend in tax collections and government spending for the remaining months of the year will have a substantial impact on the country's economic activity.
On Tuesday, Oct. 31, Finance Secretary Benjamin E. Diokno asserted that there are strong signs indicating the ongoing stabilization of the country's debt-to-gross domestic product (GDP) ratio due to lower budget deficit.
“As we enter the fourth quarter of 2023, we expect to see improvement in tax revenue collections as economic activity increases amid the holiday season, while the government further increases its spending,” Diokno said in a statement.
“The expected deceleration in inflation for the remaining months of the year could also provide support to consumption, a significant tax base,” he added..
According to the Bureau of the Treasury’s September 2023 cash operations report, the government’s fiscal deficit saw a 2.9 percent improvement to P983.47 billion in the first three quarters of 2023 from the P1.01 trillion in the same period in 2022.
Year-to-date, the deficit figure is only 66 percent of the P1.50 trillion full-year program.
“The lower deficit outturn indicates that NG debt-to-GDP ratio will continue to stabilize and allow the country to remain on track to achieving the Medium-Term Fiscal Framework (MTFF) target of 61.2 percent for 2023 and less than 60 percent by 2025,” Diokno noted.
Total revenues for the first nine months reached P2.84 trillion, a 6.8 percent increase from the P2.66 trillion collected in the same period last year.
Total revenues collected for the said period is already 76.1 percent of the Development Budget Coordination Committee’s (DBCC) full-year revenue program of P3.73 trillion.
Taxes made up the majority of revenues from January to September 2023, which improved by 6.4 percent year-on-year (YOY) to P2.54 trillion.
In particular, the Bureau of Internal Revenue (BIR) grew its collections to P1.86 trillion from January to September 2023, outperforming its collection for the same period last year by 7.3 percent.
However, BIR’s collection for the first three quarters of 2023 was slightly lower than the program by 3.9 percent, mainly due to the second tranche reduction of personal income tax (PIT), immediate expending of input value added tax (VAT) on capital goods, and timing of VAT filing that shifted from monthly to quarterly basis starting this year.
On the other hand, the Bureau of Customs’ cumulative collection for the nine-month period exhibited a 3.4 percent growth, reaching P660.4 billion, which was higher than programmed by 2.5 percent.
Likewise, tax collections from other offices are on the rise, increasing by 27.1 percent YoY to P22.9 billion.
Non-tax revenues also significantly improved, reaching PHP 296.5 billion from January to September 2023. This represents a 10.5 percent increase compared to the same period last year.
In terms of expenditures, government underspending has decreased as the government already released 73.1 percent of its P5.23 trillion full-year program for the year.
Total expenditure for the first nine months of 2023 reached P3.82 trillion, 4.2 percent higher year-on-year.
This is expected to increase further in the fourth quarter as government agencies implement catch-up plans, Diokno said.