The jump in taxes collected during the first three months augurs well with the government’s plan to hike spending and usher in a “golden age of infrastructure” in the next six years, according to Barcelona-based economic analysis provider FocusEconomics.
The think tank said the Philippine economy “should post another year of solid growth, despite decelerating slightly” as it projected 2017 GDP expansion at 6.5 percent, slower than last year’s 6.9 percent and at the lower end of the government’s 6.5-7.5 percent target.
Tax revenues jumped 13 percent year-on-year to P479.6 billion as of end-March, latest government data showed. The first-quarter take of the country’s biggest tax collection agencies, the bureaus of Internal Revenue and of Customs, grew 12 percent to P370.4 billion and 15 percent to P104.1 billion, respectively.
“Private consumption should continue to expand robustly, underpinned by a tight labor market, rising overseas remittances and lower income taxes, while fixed investment will benefit from higher business confidence and government infrastructure spending,” FocusEconomics said.
It also noted that “strong external demand, especially from China, caused exports to increase strongly in the first two months of the year and led to further growth in new orders in March.”
Budget Secretary Benjamin E. Diokno had said the government’s borrowings “will be complemented by increased revenue collection resulting from improved tax administration and the new revenue measures proposed by the Department of Finance.” He was referring to the first tax reform package now pending in Congress.
“This will raise the revenue effort to 15.2 percent of GDP in 2017, steadily increasing to 17.7 percent in 2022. The new revenue measures will contribute roughly 1 percent of GDP annually over the medium term,” Diokno had said.
The first tax reform package will be the “cornerstone” of the administration’s P8.4-trillion infrastructure program.
Finance Secretary Carlos G. Dominguez III also said the administration’s banner “Build, Build, Build” would be also funded by a combination of resources from foreign development aid and commercial loans. —BEN O. DE VERA