Gov’t back to fiscal surplus on robust tax collection

Under the TRAIN law, the estate tax is now at a uniform rate of 6 percent of the net estate while the documentary stamps tax stays at 1.5 percent of the net estate.

MANILA, Philippine — The national budget position swung to a surplus in January after eight straight months of deficit as a strong growth in state spending was matched by an even more robust revenue collection.

Data released Friday by the Bureau of the Treasury showed that the state had posted a budget surplus of P88 billion in the first month of 2024, a turnaround from the P401-billion deficit recorded in December last year.

Compared with a year ago, the January outturn was almost double the P45.7-billion government surplus recorded before.

A budget surplus happens when revenue collections outpaced government spending, while a deficit means the reverse occurred.

Revenue take outpaced spending

Sought for comment, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, was impressed with the expenditures and revenue collection performance of the government in January. He said in a Viber message that it’s “good to see strong spending alongside better revenue collection.”

“If the government will be counted on to support sagging growth momentum, it will only be feasible if accompanied by commensurate gains in revenue collection,” Mapa added.

READ: Gov’t outlays to boost PH ahead of midterm polls —UBS

Total government revenues in January amounted to P421.8 billion, up by 21.15 percent year-on-year.

Figures showed that collections by the Bureau of Internal Revenue had jumped 31.35 percent to P308.4 billion, while the Bureau of Customs had managed to raise P73.4 billion, up 3.98 percent.

On the expenditures side, the government spent a total of P333.9 billion in January, up at an annualized rate of 10.39 percent. Of that amount, productive disbursements on state programs and projects grew 1.64 percent year-on-year to P259.6 billion, while interest payments for outstanding debt reached P74.2 billion, representing a sharp increase of 58.02 percent.

Gov’t borrowing plan

The Marcos administration is planning to borrow a total of P2.46 trillion from creditors at home and abroad this year to help bridge its budget deficit, which is projected to hit P1.4 trillion.

READ: PH plans to borrow P2.46 trillion in 2024

Finance Secretary Ralph Recto said the government would remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources. This means that the borrowing program this year will be composed of local debts worth P1.85 trillion and foreign financing amounting to P606.85 billion.

Such a strategy, Recto explained, would “mitigate foreign exchange risks, take advantage of the abundant liquidity in the country’s financial system, and support the development of the local debt and capital markets.”

To diversify funding sources, Recto said the government is looking at various global bond markets, with a “potential curtain-raiser offering” within the first semester.