Press Releases

Salceda says deficit “to be smaller than expected” as revenues pick up; House tax chair says committee to intensify investigation, enforcement to support government revenue efforts

November 26th, 2021

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) believes that the government’s deficit this year will be smaller than expected by the Development Budget Coordinating Committee (DBCC), as revenues recover and spending mildly decelerates.

“The deficit cap is 1.9 trillion pesos this year, or around 9.3% of gross domestic product. As of October, we are just at 1.2 trillion. That’s around 63% of the deficit, with just one quarter left,” Salceda said.

“We are very likely to see deficit hit just 1.7 trillion when the year ends. That’s lower by around 200 billion, which is of course good for our fiscal space.”

“It’s mostly good news, because the lower-than-expected deficit is largely due to revenue recovery. In 2020, we raised 2.855 trillion in revenues. After three quarters, we are now at 87.2% of that figure, or 2.49 trillion. I am confident we will be very close to 2019 levels, or pre-pandemic revenues, once all the revenues are totaled in,” Salceda added.

“I credit this recovery in revenues to the resiliency of our tax system due to the comprehensive tax reform program. I am proud of the work the committee has done to ensure that tax effort does not collapse,” Salceda said.

Salceda also says that tax effort is likely to be the highest since 1997, the year when the first Comprehensive Tax Reform Program was enacted, under the Ramos administration. Tax effort is the ratio of tax collections to GDP.

“We are probably hitting 14.8% tax effort this year. That’s higher than anything we have had since 1997. Every administration that confronted a crisis saw its tax effort decline. This administration actually improved tax effort during the crisis. That’s commendable, and partly due to the reform-induced resiliency of our tax system due to the record of landmark reforms we enacted.”

House tax panel to strengthen tax enforcement, administration measures

Salceda meanwhile says that the Committee on Ways and Means will continue its efforts to strengthen enforcement and administration.

Salceda noted that the Committee successfully initiated changes such as the Task Force against Fuel Smuggling, joint enforcement efforts by the Bureau of Customs and the Philippine Economic Zone Authority (PEZA) to prevent the abuse of ecozones as smuggling conduits, and stricter policies to prevent cigarettes for export from leaking to the domestic market.

“We were able to work with the tax agencies and other government offices to make changes to tax administration even without legislated reforms. This kind of partnership will continue in these final months of the administration.”

Salceda says his next targets are improved enforcement against food smuggling, coast guard and customs coordination, and the abuse of customs bonded warehouses.

“We’ll keep at it. I accept the reality that raising new taxes during these times is difficult. We will have to be stronger at enforcement and administration. The committee will persist on these areas, too.”

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