April budget deficit narrowed to P44.4B as mandatory tax deadline boosted revenue take
MANILA, Philippines — Since the government did not extend the mandatory April 15 income tax-filing and payment deadline this year unlike last year, its budget deficit narrowed by 83.8 percent year-on-year to P44.4 billion in April as revenues climbed by more than half.
The Bureau of the Treasury’s latest cash operations report (COR) released Tuesday showed a smaller fiscal deficit compared to P273.9 billion a year ago mainly as tax and non-tax revenues climbed 55.5 percent to P291.9 billion last month from P187.8 billion in April 2020.
The tax take, in particular, jumped 117.8 percent to P272 billion from P124.9 billion a year ago.
To recall, the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) had stood pat and no longer extended the deadline to file and pay 2020 income taxes despite the most stringent enhanced community quarantine (ECQ) reimposed during the first two weeks of April in National Capital Region (NCR) Plus, as well as President Rodrigo Duterte’s approval of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act only in late March.
Corporate taxpayers had to adjust their 2020 payments to the lower rates provided under the CREATE Law, which retroactively reduced the income tax rate slapped on firms to 25 percent effective July 2020, from 30 percent previously — which had been the highest in Asean. It also slashed to an even lower 20 percent the levy on micro, small and medium enterprises (MSMEs).
In lieu of a prolonged deadline, the BIR instead allowed taxpayers to file tentative returns and amend them as needed.
In contrast, the deadline to file and pay 2019 income taxes was moved to June 15, 2020, as 75 percent of the economy stopped during the ECQ imposed from mid-March to May last year.
As it stuck with this year’s deadline, the BIR’s collections in April grew 142.03 percent to P219 billion from P90.5 billion a year ago.
However, the actual take was below the BIR’s P235.2-billion target for the month.
On the other hand, the national government’s expenditures in April dropped by 27.1 percent to P336.3 billion from a year ago’s P461.7 billion due to “high-base effect of releases for COVID-19 emergency response and measures under Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act in 2020,” the Treasury explained in a statement, referring to the stimulus package at the onset of the pandemic last year.
The Treasury pointed out that billions of pesos in dole-outs under the social amelioration program (SAP) and small business wage subsidy (SBWS), plus the Bayanihan grant to provinces, cities and municipalities for pandemic response were disbursed in April 2020.
During the January to April period, the year-to-date budget deficit inched up 1.6 percent to P365.9 billion from P360 billion a year ago.
End-April disbursements on public goods and services rose 3.3 percent year-on-year to P1.35 trillion, while revenues increased 3.9 percent year-on-year to P988.4 billion.
The bigger government spending for COVID-19 response, which included vaccine purchases, will bloat its budget deficit in 2021 to a bigger P1.86 trillion or 9.4 percent of gross domestic product (GDP).
The Cabinet-level Development Budget Coordination Committee (DBCC) earlier programmed the 2021 fiscal deficit at P1.78 trillion or 8.9 percent of GDP — in the middle of the pack among the Philippines’ Asean neighbors and similarly rated investment-grade economies.
Last week, the DBCC jacked up this year’s spending program to P4.74 trillion from P4.66 trillion previously, while maintaining the revenue goal at P2.88 trillion.
