Government eyes P4 trillion revenue by 2024

MANILA, Philippines — The government plans to take advantage of digital platforms to increase its revenue collection to more than P4 trillion by 2024 as part of efforts to cut the country’s budget deficit in the next three years.

Based on the fiscal plan set by the Cabinet-level Development Budget Coordination Committee (DBCC), the government should raise its revenue output to 15.3 percent of the economy at P3.3 trillion next year, then to 15.5 percent at P3.62 trillion in 2023 and 15.9 percent at P4.05 trillion in 2024.

On the other hand, the share of government spending to gross domestic product will drop to 23 percent at P4.95 trillion in 2022, 21.6 percent at P5.06 trillion in 2023 and P5.35 trillion in 2024.

The budget deficit should go down as well to 7.7 percent of the economy next year, 6.1 percent in 2023 and 5.1 percent in 2024. To do this, the DBCC said state agencies would pursue a consolidation program that seeks to recalibrate the country’s fiscal standing in the post-pandemic period.

The DBCC also said the government would bank on the expansion of the digital sector to achieve its revenue targets in the coming years. The Bureau of Internal Revenue has expanded its tax watch to industry players in online platforms, such as play-to-earn applications and social media influencers.

For 2021, the government expects to collect over P3 trillion in revenues, surpassing its target of generating P2.88 trillion in the second year of the pandemic.

“Revenue projection for 2021 is expected to exceed the target and reach P3.027 trillion due to the increased economic activity and improved services of our revenue agencies arising from the digitalization projects,” the DBCC said.

Moving forward, the government plans to file a cash-based budget of P5.242 trillion for 2023, an expenditure plan that will rely on the improvement of revenue efforts of state collectors.

Further, revenue agencies need to step up their collection schemes, as the government looks to reduce its borrowings to temper its outstanding debts. For next year, the financing program was cut to P2.47 trillion, from P3.07 trillion in 2021, according to the Bureau of the Treasury.

As of October, the country’s debt pile has risen to a record P11.97 trillion. Worse, the debt stock when measured against the gross domestic product (GDP) has swelled to a 16-year high of 63.1 percent, exceeding the 60 percent threshold observed by credit raters and multilateral lenders.

In the medium term, the government intends to temper its borrowing program to P2.31 trillion in 2023 and P2.37 trillion in 2024, bulk of which will be sourced from domestic investors.