Tax season fails to beef up budget surplus

MANILA, Philippines — The recent tax season failed to raise the country’s budget surplus in April as the growth of state expenditures outpaced what the government collected from revenues.

Data from the Bureau of the Treasury showed that the government incurred a lower budget surplus of P42.7 billion in April, 36 percent lower than last year’s P66.8 billion.

This is the second time this year that the government posted a surplus after the record P88 billion in January.

The month of April is typically an excess, although lower year-on-year this time, amid the tax season following the annual income tax return filing.

Still, a budget surplus means that the government earned more than what it spent during a given time. The extra money can either be used to pay off debts or be invested in other programs.

For the four-month period, however, the government incurred a higher budget deficit of P229.9 billion, up 13 percent from P204.1 billion in the same period in 2023.

Data showed that total revenue collection in April jumped by 22 percent to P537.2 billion as against the P440.7 billion in the same period last year, with the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) both posting increases.

The bulk or 86 percent of the revenues came from tax collections at P461.8 billion, up by 14 percent.

BIR’s haul grew by nearly 13 percent to P378.5 billion due to an overperformance in all major tax types compared to last year.

Both income tax and value-added tax posted double-digit growth as annual income tax filing and first quarter VAT payments were due in April.

However, the BIR fell short by seven percent of its P406 billion target for the month.

The BOC, on the other hand, saw its collection jump by 20 percent to P80.7 billion from P67.6 billion year-on-year, driven by an improved system of determining the customs value of imported goods, strengthened border protection and concrete trade facilitation efforts.

Non-tax collections also more than doubled to P75.4 billion in April.

Income generated by the Treasury soared three-fold to P64 billion, driven by higher dividends after the Department of Finance ordered a hike in state-run corporations’ remittance rate to 75 percent from 50 percent previoulsy.

Top contributors include the Land Bank of the Philippines, Philippine Ports Authority, Manila International Airport Authority and the Subic Bay Metropolitan Authority.

Collections from other offices including privatization proceeds and fees and charges for the month, however, dropped by 33 percent to P11.4 billion due to the timing of the one-off remittance of disposition proceeds from the Bases Conversion Development Authority last year.

Meanwhile, government spending in April was jacked up by 32 percent to P494.5 billion from P373.9 billion in 2023.

Primary expenditures at P427 billion accounted for 86 percent of the total spending, rising by 30 percent.

This was driven by higher releases of the national tax allotment and subsidies to state-run corporations, as well as the release of the fourth tranche of capitalization of the Coconut Farmers Industry Trust Fund.

The government likewise ramped up its interest payments by 46 percent to P67.5 billion from P46.3 billion a year ago due to the timing of payments for domestic securities and the impact of foreign exchange fluctuations on foreign borrowings.