Albay Rep. Joey Salceda on Sunday said the government’s deficit in 2020 would be smaller than expected by the Development Budget Coordinating Committee as revenues recover and spending mildly decelerates.
“The deficit cap is P1.9 trillion this year, or around 9.3 percent of gross domestic product. As of October, we are just at 1.2 trillion. That’s around 63 percent of the deficit, with just one quarter left,” he said.
“We are very likely to see deficit hit just P1.7 trillion when the year ends. That’s lower by around P200 billion, which is of course good for our fiscal space,” he added.
Salceda is the chairperson of the ways and means committee in Congress.
“It’s mostly good news, because the lower-than-expected deficit is largely due to revenue recovery. In 2020, we raised P2.855 trillion in revenues. After three quarters, we are now at 87.2 percent of that figure, or P2.49 trillion. I am confident we will be very close to 2019 levels, or pre-pandemic revenues, once all the revenues are totaled in,” he said.
“I credit this recovery in revenues to the resiliency of our tax system due to the comprehensive tax reform program. I am proud of the work the committee has done to ensure that tax effort does not collapse,” he noted.
The tax effort is likely to be the highest since 1997, the year when the first Comprehensive Tax Reform Program was enacted, under the Ramos administration, he said. Tax effort is the ratio of tax collections to GDP.
“We are probably hitting 14.8 percent tax effort this year. That’s higher than anything we have had since 1997. Every administration that confronted a crisis saw its tax effort decline. This administration actually improved tax effort during the crisis. That’s commendable, and partly due to the reform-induced resiliency of our tax system due to the record of landmark reforms we enacted,” he noted.
Meanwhile, the Albay lawmaker said his committee on ways and means would continue its efforts to strengthen enforcement and administration.
“We were able to work with the tax agencies and other government offices to make changes to tax administration even without legislated reforms. This kind of partnership will continue in these final months of the administration,” he cited.
According to Salceda, his next targets are improved enforcement against food smuggling, coast guard and customs coordination, and the abuse of customs bonded warehouses.