Tax effort improves to near record high

MANILA, Philippines —The share of the country’s tax collections to gross domestic product (GDP) rose to 15.7 percent in the first three quarters, providing fuel to support the country’s bid for a high and inclusive growth, the Department of Finance (DOF) said yesterday.

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said tax effort in the first three quarters reached 15.7 percent, close to the record high of 15.8 percent clocked in back in 1997.

This is likewise higher than the 15.2 percent tax effort recorded in the same nine-month period in 2018.

Beltran said this, as a result of the government’s sound fiscal policy, would continue “to be a pillar for high, sustainable, and inclusive growth.”

According to data from the Bureau of the Treasury (BTr), government revenues from the January to September period grew by 10.25 percent to P2.33 trillion from P2.11 trillion in the same period last year.

Tax revenues, alone, climbed by 10.3 percent to P2.09 trillion from P1.9 trillion a year ago.

Including non-tax revenues, Beltran said the government’s revenue effort in the first nine months expanded to 17.5 percent, up from 16.9 percent last year.

“With ample resources to mobilize, agencies should nevertheless continue working with Congress for the timely passage of the 2020 budget,” Beltran said.

On the other hand, the DOF’s chief economist said expenditure effort in the first three quarters slightly declined to 19.7 percent from 20 percent a year ago.

This is despite the 5.51 percent increase in government disbursements for the January to September period, reaching P2.63 trillion as compared to P2.49 trillion last year.

As a result, Beltran said the country’s fiscal balance narrowed to 2.2 percent of GDP, lower than the 3.2 percent ceiling set by economic managers. This is also lower than the 3.1 percent deficit-to-GDP ratio recorded in the same nine-month period in 2018.

The economy grew by 6.2 percent in the third quarter, faster than the six percent recorded in the same quarter last year and 5.5 percent in the same April to June 2019 period.

This brought the country’s average growth for the first three quarters to 5.8 percent.

According to Beltran, growth for the quarter was consumption-led, driven by easing inflation.

“There are also signs that government spending and public investment are picking up,” he said.

He said investment remained timid, but public construction grew by 11 percent in the third quarter, reversing the slump in the preceding second quarter.