The budget deficit may breach over 2 percent of the gross domestic product (GDP) this year as Budget Secretary Benjamin E. Diokno blamed slower revenue collection thus far.
On the sidelines of the Cabinet-level, inter-agency Development Budget Coordination Committee (DBCC) meeting Tuesday, Diokno also told the Inquirer they will submit the proposed 2017 national budget of about P3.3 trillion to Congress on Aug. 15.
As for the fiscal targets, Diokno said the proposal to widen the deficit to 3 percent of GDP from the previous program, earlier set by the Aquino administration, of 2 percent, would be implemented next year, although the budget deficit would likely exceed 2 percent of GDP this year.
“The collections of the bureaus of Internal Revenue [BIR] and Customs had been weak due to low global oil prices and slower imports. [Former BIR commissioner] Kim Henares had collected below target,” Diokno said.
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The latest BIR data showed that as end-May, its tax take amounted P660 billion, up by over a tenth year-on-year but a fifth below the P833.9-billion target for the five-month period.
Under the Aquino program, revenues had been expected to reach P2.697 trillion this year.
Diokno said they would adjust the revenue targets downward but would likely keep the expenditure targets. “There’s no point cutting on spending. We have to make up for the past neglect in infrastructure.”
Expenditures had been programmed by the Aquino government to hit P2.993 trillion in 2016.
As for the Duterte administration’s plan to come up with a comprehensive tax reform proposal by September, Diokno said the impact of any tax measure would not be felt this year. “It will have a lagged effect,” he said.
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Diokno noted that the proposal to cut personal income tax rates would result into foregone revenues, while the plan to slash corporate income tax is seen revenue-neutral.
The Budget chief said the Duterte administration was eyeing to implement tax measures with long-term impact, such as the rationalization of the tax perks being given away to investors. CDG