GOVERNMENT revenue and disbursements as a share of the economy rose in the five months to May, the Department of Finance (DoF) said, improving the prospects for achieving economic growth targets this year.
In an economic bulletin, the Finance department said revenue effort grew to 18.17% of gross domestic product (GDP) in the five months to May, 1.43 percentage points higher than the year-earlier rate.
“Tax effort also rose by an unprecedented 1.19 percentage points, from 15.14% to 16.33%, the highest first five months’ tax effort ever achieved,” the DoF said.
Expenditure effort, meanwhile, increased to 20.29%, up 2.48 percentage points from a year earlier, which the DoF said is “the highest first five months’ expenditure effort since 2003, thus boosting its contribution to GDP growth.”
“Fiscal space expanded by TRAIN 1 and tax administration enabled government to boost investment and growth,” the DoF said, referring to the Tax Reform for Acceleration and Inclusion Law, or Republic Act No. 10963 which went into effect in January.
“Strong macroeconomic fundamentals backed by tax reform and the Build, build, build program will continue to boost economic growth closer to the optimum 7-8% level as the competitiveness of the economy rises and more jobs are created,” the DoF said.
The law increased excise tax rates for fuel, automobiles, tobacco, minerals, coal, and imposed new levies on sugar-sweetened beverages, removed some value-added tax exemptions, and reduced personal income, donor, and estate tax rates, while also modernizing tax administration.
The DoF has said that at least nine large-scale infrastructure projects are moving into the construction stage this year. The National Economic and Development Authority (NEDA), meanwhile, said on Wednesday that there are 16 approved big-ticket projects expected to be completed by 2022 — more than the eight initially expected.
The Bureau of the Treasury reported on Monday that overall government revenue in the first five months of the year grew 19% to P1.19 trillion — exceeding its target that period by 7%, or some P81.5 billion.
Of this amount, tax revenue accounted for P1.07 trillion, up 18%.
Government spending, meanwhile, surged 25% to P1.33 trillion by the end of May.
The DoF also noted that the fiscal deficit settled at 2.1% of GDP, well below the 3% target for full year 2018.
The January-May fiscal deficit is P138.7 billion, 118% wider than the year-earlier level.
This is equivalent to 26.48% of the P523.7-billion programmed budget shortfall for the full year. — Elijah Joseph C. Tubayan