Gov’t expects to breach P1.48T budget deficit cap this year
The government is likely to breach its budget deficit limit by about 3.4 percent this year but subsequent tax reforms — expected to bump up coffers by P40 billion annually — could hasten fiscal consolidation.
According to official data obtained by the Inquirer, the emerging full-year budget deficit is P1.53 trillion versus the government’s target of P1.48 trillion.
“The difference is from original targets in the Budget of Expenditures and Sources of Financing (BESF) 2024 and Development & Budget Coordination Committee recalibration. The original BESF counted revenues to be gained if all tax bills were passed last year and collected this year, but none have been passed [last year],” Finance Secretary Ralph Recto told Inquirer.
Recto is expecting the legislation of four tax bills that could speed up fiscal consolidation. These include the Passive Income and Financial Intermediary Taxation Act, excise tax on single-use plastic bags, the new mining tax regime and the Corporate Recovery and Tax Incentives for Enterprises Maximize Opportunities for Reinvigorating the Economy law, which aims to reduce the corporate income tax to 20 percent from 25 percent.
“This should be P40 billion a year for all,” Recto added.
Nontax measures
Meanwhile, he expects the bill updating the rates of motor vehicle user’s charges to be passed next year.
Recto earlier said that there would be no new taxes during the remaining years of the Marcos administration. The thrust is to instead improve revenue collection efficiency.
With that, the government plans to double nontax revenue collections this year to P400 billion.
“Nevertheless, we are committed to reducing the deficit this year. That would be on track to achieving a medium term fiscal framework and another credit rating upgrade,” he said.
In the second quarter, the budget deficit as a share of the country’s economic output rose to 5.3 percent, up from 4.46 percent in the previous quarter and 4.8 percent a year earlier. Despite the increase, it remained below the government’s 5.6 percent deficit ceiling for this year.
