NATIONAL GOVERNMENT (NG) the budget deficit was increased to P273.3 billion in September, as revenues and expenditures posted double-digit growth, the Bureau of the Treasury (BTr) said Thursday.
The latest data from the Treasury showed the fiscal deficit increased by 8.9% in September from P250.9 billion in the same month last year, “as the increase in expenditure outpaced the increase in revenue.”
Month-on-month, the budget deficit increased by 404% from P54.21-billion defavailable in August.
Revenue collection fell 17.32% to P299.7 billion in September from P255.4 billion last year.
Tax revenue increased by 8.53% to P253.5 billion in September, driven by the Bureau of Internal Revenue (BIR) which collected 14.79% to P174.7 billion.
The Department of Finance says the increase in BIR collection is “due to the higher personal income tax especially in the withholding of wages due to the issuance of different opinions on the salaries of civil servants,” as well as the increase in the tax on document stamps.
However, the Bureau of Customs (BoC)’s revenue fell 3.31% to P76.3 billion in September amid a double-digit decline in sales. The executive order to reduce the import prices of rice and other goods came into effect on July 5.
“Also, the decline (in the BoC’s collection) is due to the alarming increase in smuggling activities during the year, as the current amount of BoC’s seized goods has already exceeded its total haul in 2023,” said the Treasury.
On the other hand, nontax income increased by 111.16% to P46.2 billion in September from P21.9 billion a year ago “due to the one-time exit of the Public-Private Partnership (PPP) concession agreement.”
Treasury income jumped 24.86% year-on-year to P9.9 billion in September “driven by higher NG share from PAGCOR (Philippine Amusement and Gaming Corp.) income, interest income from NG deposits, and cash collections of assurance.”
Nontax revenue collected from other offices increased by 160.39% year-on-year to P36.3 billion.
Meanwhile, government spending fell by 13.15% to P572.9 billion in September from P506.3 billion in the same month in 2023.
“The significant increase was mainly due to non-interest expenses, mainly due to the implementation of capital projects used by the Department of Public Works and Highways,” according to the Treasury.
The cost increased as the government implemented the first phase of civil service salary adjustments in August. The government has also increased the application fees for emergency health allowances for health workers, BTr added.
Primary spending — which refers to total expenses minus interest payments — rose 14.75% to P499.1 billion in September.
Interest payments increased by 3.36% year-on-year to P73.9 billion, as NG provided new loans from the International Bank for Reconstruction and Development, and the impact of foreign currency fluctuations.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said the increase in revenue was offset by “increased debt service/interest costs that increased government spending.”
“With financial tightening in the area, it is possible that income generation has been restricted, not allowing it to grow as much as possible,” said Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera in a Viber message.
A NINE MONTH DEFECT
For the first nine months of 2024, the budget deficit decreased by 1.35% to P970.2 billion from P983.5 billion last year.
“The deficit in the first three quarters was 9.08% short of the P1.1-trillion plan for the 9-month period and is 65.36% of the revised P1.5-trillion full-year plan,” said the Treasury.
Revenue in the January to September period increased 16.04% to P3.29 trillion from P2.84 trillion in the same period in 2023.
Tax revenues, which comprise 85.39% of the total collected, grew by 10.62% to P2.81 trillion as of the end of September. However, this was 0.79% lower than the P2.83-trillion target for the nine-month period.
BIR collections also increased by 12.73% to P2.09 trillion in the nine-month period, but fell short of the P2.12-trillion target by 0.98%. This is also 73.52% of the revised price of P2.8-trillion for 2024.
“The double-digit annual growth is underpinned by higher collection of VAT (value added tax), followed by income taxes, other local taxes, and percentage tax,” the Treasury said.
BTr attributed the increase in VAT collections to changes in the payment system under the Tax Reform for Acceleration and Inclusion law, which allowed taxpayers to file their VAT returns quarterly.
Sales tax revenue increased 4.59% to P690.7 billion in the nine-month period “due to higher VAT and import tax despite the negative performance in September,” BTr said.
However, Customs collection was 0.46% short at P693.9-billion. Figures as of the end of September accounted for 73.5% of the revised P939.7-billion plan for the full year.
Nontax revenue as of the end of September jumped 62.54% to P481.1 billion, as collections from otherffices almost doubled to P270.9 billion and Treasury income increased by 33.02% to P210.2 billion.
“The highest income for this period was due to the P30 billion from the Manila International Airport Authority (MIAA), which represents the first payment of the MIAA-Ninoy Aquino International Airport PPP Project,” said BTr.
As of the end of September, nontax revenue collection has already surpassed the P449.6-billion full-year government goal by 7%.
Meanwhile, government spending jumped 11.56% to P4.26 trillion in the first nine months from P3.82 trillion in the same period in 2023.
Government spending for the period broke the nine-month plan of P4.22-trillion by 1.09%. So far, NG has already released 74.09% of the revised P5.8-trillion plan for the full year.
Principal expenses grew by 9.48% year-on-year to P3.7 trillion at the end of September while interest payments increased by 26.77% to P583.3 billion.
“Probably, the deficit may continue to expand to additional costs due to infrastructure use, interest rate costs and the impact of disasters,” said Jonathan L. Ravelas, senior consultant at professional services firm Reyes Tacandong & Co., via Viber.
Mr. Ricafort said a wide budget deficits “will still lead to more NG borrowing and overall debt, thus requiring more taxation and so on. fways to transform iscal.”
The newly imposed VAT on digital service providers and a 1% withholding tax on online retailers will help increase revenue capture and reduce the budget.fhe said. – BMDCruz
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