The Philippine Online Chronicles

The Aquino administration is expecting a higher-than-expected budget deficit this year as it plans for rapid improvement of education, infrastructure and health, according to the First Metro Investment Corp. (FMIC) and University of Asia and Pacific (UA&P).

For the semester, budget deficit already ballooned to P196.7 billion prompting the Development Budget and Coordinating Committee (DBCC) to revise its target to P325 billion or 3.9 percent of the Gross Domestic Product (GDP).

The total national government borrowing requirements are expected to be at P57.8 billion. Of that amount, finance officials disclosed that P34.3 billion will be sourced through foreign borrowing, while the balance will be funded locally.

Still, FMIC and UA&P research studies agree that the budget deficit would not exceed the four percent estimate. Better tax collection can help mitigate the worsening deficit. The Bureau of Internal Revenue (BIR) should, however, improve its 2.8 percent annual growth, as the Bureau of Customs (BOC) has already done better by posting a 14.6 percent improvement. The two combine for 95 percent of the total tax collection of the country.

When President Aquino spoke recently at the 106^th anniversary of the BIR, he promised the officials and employees that they would receive rewards under the lateral attrition law if they perform their duties well. He hopes to increase the tax-ratio effort to 15 percent of the GDP from the current 13 percent, during his term.

He noted that during former President Fidel Ramos’s term, tax-effort ratio reached as high as 17 percent. “If it was done before, it can be done again now,” he said.

At present, the current tax-effort ratio is still lagging behind the Asian average of 16 percent. An increase of just one percentage point is already equivalent to P80 billion.

The President also stressed the importance of filing tax evasion cases. Last month, the BIR filed a tax evasion case against William Villarica, the owner of Villarica Pawnshop.

For the month of August, the agency is tasked to collect P67.38 billion, and P860 billion for the year. For June, BIR only collected P59.36 billion, P3 billion short of its target. Commissioner Kim Henares has already hinted that the July collection might not reach the target as there were lingering uncertainties and several adjustments were underway.

Photo: “Marcelo B. Fernan Bridge” by Judhi Prasetyo, c/o Flickr. Some Rights Reserved