Budget surplus widens to P10B in January as revenues jump due to TRAIN

Government revenues grew at a faster pace and exceeded the amount spent on public goods and services in January, the first month of implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, Bureau of  Treasury data released Friday showed.

As such, the national government posted a P10.2-billion budget surplus at the start of the year, 359-percent bigger than the P2.2-billion surplus during the same month last year.

Combined tax and non-tax revenues jumped 19 percent in January to P238.9 billion from P200.3 billion a year ago.

The tax take climbed 18 percent year-on-year to P217.8 billion, while non-tax collections increased 35 percent to P21.1 billion.

Collections

The Bureau of Internal Revenue, the country’s biggest tax-collection agency, saw its January take grow 19 percent year-on-year to P175.6 billion.

“The growth [in BIR collections] was mainly driven by the implementation of the TRAIN, which took effect on Jan. 1, 2018,” the Treasury said in a statement.

Signed by President Duterte in December, Republic Act No. 10963 or the TRAIN Law jacked up or slapped new excise taxes on oil, cigarettes, sugary drinks and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000.

The Bureau of Customs, meanwhile, collected P40.8 billion in import duties and other taxes, up 14 percent year-on-year.

Improved efficiency

The Treasury attributed the double-digit growth in the BOC’s take to “improved collection efficiency and intensive anti-corruption and anti-smuggling drive.”

Also, the income generated as well as collected by the Treasury slightly rose to P8.1 billion due to “higher income from national government deposits as well as remittances of the national government’s share from Philippine Amusement and Gaming Corp.’s income and Manila International Airport Authority’s profit along with other government service income,” it said.

“These more than compensated for the lower investment income of the Bond Sinking Fund,” it added.

Expenditures

Expenditures grew 15 percent to P228.7 billion from P198.1 billion in January last year.

“Ramped-up infrastructure spending as well as the implementation of the third tranche of compensation adjustment for government employees contributed to the month’s performance,” the Treasury said.

Executive Order No. 201 issued by former president Benigno Aquino III mandated a yearly increase in the salaries of government personnel from 2016 until 2019, with the adjustments implemented in January of each year.

Also, economic managers earlier expressed confidence that the Duterte administration’s ambitious “Build, Build, Build” infrastructure program will bolster government disbursements to reverse underspending in previous years.

Under “Build, Build, Build,” the government plans to roll out 75 flagship, “game-changing” projects, with about half targeted to be finished within President Duterte’s term, alongside spending a total of over P8 trillion on hard and modern infrastructure until 2022.

Interest payments

The Treasury said interest payments in January rose 3 percent year-on-year to P43.5 billion as “higher domestic interest payments drove the increase, mainly on account of the coupon payments for 2017 issuances, including those for retail treasury bonds (RTBs).”

The government sold RTBs to small investors twice last year—a record P255.4 billion in five-year IOUs in December on top of P181.9 billion in three-year bonds last April.

“Despite the increase, interest payments accounted for only 19 percent of total disbursements against the previous year’s 21 percent, showing that the growth in disbursements were for productive components of the budget which also grew by 19 percent year-on-year,” the Treasury said.

Expenditures net of interest payments increased to P185.2 billion from P155.7 billion last year.