A DEPARTMENT of Finance (DOF) official has cited the need to further push for fiscal reforms, noting its benefits for the government and the people during the pandemic.
In an economic bulletin on Friday, Finance Undersecretary Gil Beltran said “the fiscal reforms adopted by the Duterte administration boosted the tax effort to its highest first-quarter level in history”.
“These reforms made the country one of the few emerging economies to maintain investment-grade rating and avoid a credit rating downgrade which would have pushed up interest rates and delayed nascent economic recovery,” he said.
He said the pandemic has increased the need for government to hike expenditures given the need to address the impact of the virus-induced crisis.
Bureau of the Treasury (BTr) data showed that government spending rose by 19.86 percent year-on-year in the first quarter this year to P1.017 trillion.
However, revenues by the national government fell by 8.73 percent during the same period to P696.5 billion.
This resulted in a budget gap of P321.5 billion, up 273.11 percent against the P86.2 billion deficit in end-March 2020.
Amid the drop in revenues, Beltran noted the rise in tax revenues during the same period.
Tax revenues jumped by 7.09 percent year-on-year in March this year to P190.1 billion while it rose by 0.87 percent year-on-year in the first quarter this year.
He attributed the first quarter results to the 0.18 percent year-on-year rise of Bureau of Internal Revenue’s (BIR) collection during the period and the 2.66 percent expansion in collections by the Bureau of Customs (BOC).
He said “other taxes which include motor vehicle taxes and forestry charges also rose by 10.8 percent” but “non-tax revenues declined by 50.6 percent as dividend remittances normalized after last year’s huge dividend remittances from GOCCs (government-owned and controlled corporations) as mandated by Bayanihan to Heal as One Act and Treasury income was reduced by lower interest rates.”
He said that while revenue effort fell by 1.14 percentage points to 16.03 percent from 17.16 percent in the first quarter of 2020 because of non-recurrent revenues, this was offset by the improvement in tax effort.
He said tax effort posted its record-high of 14.41 percent in the first quarter this year after it rose by 0.44 percentage points from 13.96 percent same period last year.
“Robust collections from BIR and BOC were boosted by the implementation of tax reforms,” he said.
He, thus, stressed the need for the government to “continue to adopt fiscal reforms, particularly tax reforms still pending in Congress, to sustain these fiscal gains.”
“Due to fiscal reforms, the country was able to fund the unprecedented fiscal requirements imposed by the pandemic and, at the same time, protect its strong macroeconomic fundamentals,” he added. (PNA)
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