Budget surplus widens in Aug

MANILA, Philippines - The government enjoyed a wider budget surplus in August on the back of a recovery in revenues, the Department of Finance (DOF) reported yesterday.

The surplus – which indicates revenues outstripped spending – amounted to P32.6 billion in August, more than double the previous year’s P15 billion.

Broken down, revenues surged 19 percent to P209.6 billion, the quickest pace since May last year’s 41 percent and reversing a five-percent slump the previous month.

Expenditures, meanwhile, rose nine percent to P177 billion, faster than five percent in July, data showed.

The latest figure trimmed the year-to-date budget deficit to P138.4 billion, only around 36 percent of the revised P388.9-billion cap for the year.

“The new government has committed to raise public investments in infrastructure, human capital and social protection for vulnerable sectors...,” the DOF said in a statement.

“But to help raise needed funds for public investments, the government is pursuing a comprehensive tax reform program to discourage evasion and avoidance, broaden the tax system’s narrow base and make the current system simpler and more equitable,” it said.

Indicatively, the Duterte administration, which took over July, aims to lower personal and corporate income, estate and capital taxes, provide amnesty, while raising taxes on alcohol, tobacco, cars and oil products.

With lower tax rates and higher outlays, Finance Secretary Carlos Dominguez said the government “will be responsible with its finances.”

Sought for comment, Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said this remains to be seen.

“So far, this is still the usual episode of adjustment. But going forward, it will still be revenues, especially the BIR, which we should watch out,” he said in a phone interview.

In August, collections by the Bureau of Internal Revenue (BIR) increased 14 percent, reversing a one-percent decline the previous month.

Those from Bureau of Customs accelerated 23 percent from just three percent during the same period.

BIR and Customs collectively account for 90 percent of state revenues. They were up 10 and eight percent, respectively, for the first eight months.

“The response of legislators to the tax reform will be critical,” Neri said.

Actual spending rose six percent in August, while interest payments went up 42 percent.

Neri said bigger disbursements “should not be contingent on the grant of emergency powers.”