Gov't surplus narrows as higher taxes counter faster spending
MANILA, Philippines — The Duterte administration registered a narrower budget surplus in January, benefiting from a surge in revenues generated from higher taxes that offset a pick-up in spending.
In a report posted on its website on Friday, the Bureau of the Treasury said the budget surplus narrowed to P23 billion in the first month of 2020, down by nearly half from P44.5 billion in January 2019. A budget surplus indicates revenues generated surpassed the amount spent for the period.
The year-on-year result was buttressed by a disappointing January 2019, when the government operated under an old budget. At the time, state spending dropped seven percent as new projects were put on hold while awaiting a new outlay to be passed. With revenues up then, a huge surplus was recorded.
That changed this year when the 2020 budget was signed into law in the first few days of January, helping agencies plan and execute their spending ahead. That is reflected in the data, with expenditures in January up 28% year-on-year to P212.2 billion.
The revenue side also got some boost. As the year opened, new tax increases under the Tax Reform for Acceleration and Inclusion (TRAIN) also took effect and brought in more state earnings. TRAIN, which was passed in 2018, laid out yearly increases on excise taxes in oil, cigarettes, and alcohol products.
New revenues, in turn, increased total collections by 14.8% annually to P294.6 billion, Treasury data showed.
The latest data showed the government is in strong fiscal footing as it seeks to counter the economic repercussions from the coronavirus outbreak. On Tuesday, Finance Secretary Carlos Dominguez III said the government's "Build, Build, Build" program would go "full blast" this year, following a record P1.04 trillion in capital outlays in 2019.
Higher spending this year, however, will not come without a price. As the economic activity like tourism and retail slows due to virus fears, the government is seen to lose as much as P91 billion in forgone revenues this year, an amount Dominguez said will be bridge by additional borrowings.
Agency spending accelerates
On Friday's Treasury report, it showed that revenues collected by the Bureau of Internal Revenue rose 5.3% year-on-year to P194.9 billion in January. The Customs bureau, meanwhile, raised P55.9 billion, up 15.5% from same month last year.
BIR and Customs account for more than 80% of total state revenues.
Meanwhile, breaking down spending activities, the so-called "productive disbursements" by state agencies reached P210.2 billion, marking an increase of 26.4% on an annual basis.
Interest payments on government debts, on the other hand, rose a faster 33.8% to P61.4 billion, data showed.
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