8-month budget gap swells to P741B due to COVID-19
MANILA, Philippines — A pandemic-induced drop in revenues while the government spent more to fight COVID-19 widened the budget deficit by 1,510.6 percent year-on-year to P40.1 billion in August, the government reported on Wednesday.
From January to August, the fiscal deficit also ballooned by 515 percent to P740.7 billion from P120.4 billion a year ago, the Bureau of the Treasury’s latest cash operations report showed.
Last month, expenditures amounted to P283.3 billion, up 0.4 percent year-on-year and exceeding the P243.2 billion in tax and nontax revenues, which dropped 13.1 percent from a year ago.
As such, the budget deficit last August eclipsed the P2.5 billion posted during the same month last year.
In a statement, the Treasury attributed the slight increase in August disbursements to higher health and social services spending of the Department of Health and the Department of Social Welfare and Development, respectively.
The amount spent on public goods and services as of end-August also climbed by 20.8 percent year-on-year partly as the government already released P30.3 billion in subsidies to the state-run Philippine Health Insurance Corp. during the first eight months even as the agency implementing the national health insurance program faced allegations of graft and corruption.
Meanwhile, the lower tax and nontax revenues collected during the month of August was blamed by the Treasury on “the continued impact of the pandemic outbreak,” which had pushed the economy into recession.
While the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) surpassed their downgraded August targets, actual collections were down 8.6 percent year-on-year to P187.9 billion and 17.2 percent to P44 billion, respectively.
During the first eight months, the BIR’s cumulative tax take dropped by 10.3 percent year-on-year to P1.3 trillion, while import duties and other taxes collected by the BOC declined by a faster 15.6 percent to P347.3 billion.
The Treasury said that while the BIR’s end-August collection already accounted for 77 percent of its adjusted 2020 goal amounting to P1.69 trillion, the actual take was just 58 percent of its prepandemic target.
“The BIR needs a monthly average collection of P96 billion for the rest of the year to reach its revised full-year program,” the Treasury said.
Revenue Memorandum Order No. 30-2020, issued by Internal Revenue Commissioner Caesar R. Dulay on Sept. 16 showed that the BIR targeted to collect P117.6 billion in September, P114.1 billion in October, P145.4 billion in November and P115.9 billion in December.
The BOC, meanwhile, needed to generate P158.9 billion or about P40 billion a month from September to December to reach its revised goal of P506.2 billion as year-to-date collections were only 51 percent of the original program, the Treasury said.
Finance Secretary Carlos G. Dominguez III on Wednesday expressed confidence that the revised P2.2-trillion tax collection target for 2020 “will be met at the end of this year.”
Dominguez told senators that the new tax take goal was about a fourth lower than the original combined targets of the BIR and the BOC worth P3.4 trillion before the COVID-19 pandemic struck.
As such, actual BIR and BOC collections from January to August were 8-percent higher than their downscaled 2020 targets, Dominguez said.
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