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Saturday, February 24, 2024

Higher tax haul cut budget deficit to P47.8b in July

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The government’s budget deficit eased to P47.8 billion in July 2023 from P86.8 billion a year ago on the back of a 33.40-percent growth in revenue collection that outpaced the 16.22-percent increase in expenditures, according to the Bureau of the Treasury.

This resulted in a seven-month budget shortfall of P599.5 billion, down by 21.22 percent or P161.5 billion from the P761-billion gaps registered in the same period last year, data from the Treasury showed.

“The NG [national government] registered a substantial growth of 33.40 percent or P103.1 billion in its July revenue collection, reaching P411.7 billion, as both tax and non-tax collections improved for the period,” the Treasury said.

It said the positive outturn for July drove the collection in the first seven months to P2.3 trillion, 11.58 percent or P235.7 billion higher than a year ago.

Taxes, comprising the biggest portion (88.74 percent) of total revenue, expanded 10.52 percent, while the balance of 11.26 percent (P255.8 billion) from non-tax revenues also improved 20.72 percent.

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Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the budget deficit could continue to narrow in the coming months, after the tax collection season in April, amid the further reopening of the economy towards greater normalcy.

Ricafort said this could lead to increased sales, profits, employment, livelihood and other business/economic activities that fundamentally increased the government’s tax revenue collections.

He said this could “be offset by the effects of the lower individual income tax rates for most income brackets since 2023 under the TRAIN Law that could still reduce government’s tax/BIR revenue collections, going forward, but could still be partly made up by any higher tax base/collections due to the resulting increased business/sales/other economic activities due to higher take home pay by most income brackets since the start of 2023.”

The Bureau of Internal Revenue’s net collection reached P273.1 billion in July after deducting the P186.0 million tax refund, representing a 38.370percent (P75.7 billion) increase over last year’s comparable outturn. The growth translated into a year-to-date improvement of 12.21 percent or P162.4 billion, bringing the agency’s total collection to P1.5 trillion.

Collections by the Bureau of Customs in July amounted to P73.1 billion, down 12.61 percent (P10.5 billion) from P83.6 billion it raised for the same month last year. The BOC said it still managed to improve its cumulative collection to P506.5 billion in the first seven months, up 5.45 percent or P26.2 billion from the P480.3 billion a year ago.

Income from the Bureau of the Treasury surged to P50.8 billion in July from P13.4 billion a year ago, its highest monthly collection for the year. BTr’s collection for the seven-month period rose 22.4 percent to P143.8 billion and exceeded the full-year target of P58.3 billion, largely due to higher dividend remittances, income from managed funds and government deposits and the share of the government from the profit of the Philippine Amusement and Gaming Corp.

Non-tax revenue from other offices including privatization proceeds and fees and charges amounted to P12.4 billion, relatively stable compared to the level recorded in the previous year.

Government disbursements in July climbed 16.22 percent to P459.5 billion from P395.4 billion a year earlier on higher disbursements recorded in the Department of Social Welfare and Development for its social protection programs and in the Department of Health and Department of Agriculture for their banner health and agriculture programs, respectively.

“Spending in July also expanded on the back of significant infrastructure outlays of the Department of Public Works and Highways for its road network development program and the Department of Transportation for rail transport projects,” the Treasury said.

Expenditures in the first seven months reached P2.9 trillion, 2.66 percent or P74.3 billion higher than the spending performance in the same period last year.

Primary expenditures reached P396.0 billion, 15.35 percent or P52.7 billion higher than a year ago. “This offset the P15.1 billion decrease in H1 2023 allowing primary expenditures of P2.5 trillion as of end-July to grow by 1.51 percent from last year’s level,” the Treasury said.

July interest payments rose 22 percent to P63.6 billion from P52.1 billion a year earlier. In the first seven months, interest payments went up 11.87 percent (P36.7 billion) from the previous year to P346.0 billion.

“Deducting interest payments from expenditures, NG’s primary balance for July turned to a primary surplus of P15.7 billion from last year’s primary deficit of P34.7 billion. Meanwhile, the resulting overall primary deficit of P253.5 billion declined by 43.87 percent or P198.2 billion versus last year’s YTD primary deficit of P451.7 billion,” the Treasury said.

The Treasury said the second-quarter and first-half deficit stood at 4.77 percent and 4.80 percent of GDP, down from 6.62 percent and 6.53 percent last year, respectively.

Revenue effort in the first half of 2023 moderated to 16.19 percent from last year’s 16.73 percent. Tax effort similarly slowed to 14.52 percent from 14.93 percent percent in the same period last year.

Expenditure effort went down to 21.00 percent from the previous year’s 23.26 percent.

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