MANILA -- The national government managed to raise PHP619.84 billion in the first quarter of 2018, thanks in part to the Tax Reform for Acceleration and Inclusion Law (TRAIN). This represents a 16.4 percent growth in revenue or equivalent to PHP87.44 billion year-on-year.
Department of Finance Secretary Carlos Dominguez III said on Friday the improved tax administration due to TRAIN led to tax revenues growing by 18.2 percent, exceeding the 9.7 percent nominal gross domestic product (GDP) growth.
TRAIN, the first package of the government’s tax reform program, reduced personal incomes taxes but increased excise taxes on fuel, sugar-sweetened beverages, and motor vehicles since the law took effect last January 1.
Based on DOF data, the Bureau of Internal Revenue (BIR) hauled a total of 423.1 billion, higher by 14.2 percent compared to the same period last year. Meanwhile, the Bureau of Customs (BOC) raised PHP129.8 billion, higher by 24.7 percent year-on-year.
“Fiscal space expanded by TRAIN 1 and tax administration enabled government to boost investments and growth in Q1,” Dominguez said.
Expenditures for the quarter amounted to PHP782.0 billion, growing by 27.1 percent, which also outstripped the 9.7 percent nominal GDP growth due to the estimated 40.0 percent increase in capital outlays.
The national government's budget balance was at a deficit of PHP162.2 billion for the first quarter, up 95.5 percent from PHP83 billion a year earlier.
Dominguez, however, noted that the budget deficit settled at 4.1 percent of GDP in Q1, as targeted.
Tax effort rose by 1.03 percentage point, which Dominguez said was the highest first quarter tax effort ever achieved.
The Finance chief said expenditure effort also rose by 2.73 percentage point, the highest increase since 2003, thus boosting its contribution to GDP growth. Revenue effort, meanwhile, rose by 0.91 percentage point.
Dominguez said public construction expanded 25.1 percent, boosting GDP growth by 0.4 percentage point while government consumption rose 13.6 percent, contributing incremental 1.4 percent to growth.
“Strong macroeconomic fundamentals backed by tax reforms and the Build, build, build program will continue to boost economic growth to the optimum 7-8 percent level as the competitiveness of the economy rises and more jobs are created,” he said.
The Philippine economy expanded by 6.8 percent in the first quarter of 2018, making it still one of the fastest-growing economies in the region even as rising inflation reduced consumption and productivity in some sectors. (PNA)