Thursday, July 18, 2024

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Government revenue on GDP hits record levels; but deficit below target

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The Department of Finance said that the government revenue as a proportion of the economy rose in the first half as tax reform provided more fiscal space for spending, but the budget deficit remained below target.

This is mentioned In the economic bulletin released by the Department of Finance (DoF) said that the fiscal deficit was 2.34% of gross domestic product (GDP) in the first half, below the 3% ceiling the government is planning for 2018.

The revenue effort grew 1.47 percentage points year-on-year to 17.12% in the first half.It also grew from 15.82% in the first quarter.

The DoF said this level was the “highest ever achieved during the first semester.”

Tax effort, or collections as a proportion of the economy, rose 1.01 percentage points year-on-year to 15.23% in the first half, and from 14.47% in the first three months of the year.

According to the economic bulletin, “Almost a half or 0.4 percentage point is due to TRAIN (the Tax Reform for Acceleration and Inclusion law) and the rest or 0.61 percentage points due to tax administration improvements.”

The Bureau of Internal Revenue had a 11.71% tax effort, up from 11.28% a year earlier, and the Bureau of Customs came in at 3.39%, from 2.80%.Non-tax revenue effort grew to 1.89% during the period from 1.43%.

On the expenditure side, the DoF said that disbursement effort rose 1.77 percentage points year-on-year to 19.47% in the first six months, noting that this level was the “highest first semester expenditure effort since 2003, thus boosting its contribution to GDP growth.”

“Fiscal space expanded by TRAIN 1 and tax administration (improvements) enabled government to boost investment and growth in the first semester,” the DoF said.

“The strong macroeconomic fundamentals backed by tax reform and the Build, Build, Build program will continue to boost economic growth as the competitiveness of the economy rises and more jobs are created,” the DoF said in its economic bulletin.

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