Gov’t to count non-cash revenues as part of total collections starting this yr

The Arroyo administration will start counting non-cash revenues as part of its total revenues beginning this year, a move that will require an adjustment in its revenue targets and the overall 2006 budget.

After the initial controversy over the shift in accounting policy, budget officials said the budget will now count non-cash revenues to improve the country’s revenue figures as a percentage of the gross domestic product (GDP).

The shift was approved by the inter-agency Development Budget Coordinating Committee (DBCC) and was initially opposed by the Bureau of Treasury (BTr).

According to Budget Undersecretary Laura Pascua, however, the shift will be implemented starting this year, explaining that the accounting procedure "merely aligns ours with international practice."

Pascua explained that there will be no change in the bottom line budget deficit since non-cash revenues were "budget-neutral" and would be accompanied by a corresponding adjustment in the targets of the revenue-collecting agencies such as the Bureau of Customs and the Bureau of Internal Revenue (BIR).

Pascua explained that in the past, non-cash revenues were counted in the cash operations report since it reflected the tax subsidies that the government has been providing certain government and private corporations under various special laws.

The practice was discontinued in 2001, according to Pascua, because the Department of Budget and Management (DBM) wanted to make sure that the government’s cash collection was "immediately clear."

"At the time, we didn’t want to count revenues unless they were actually cash and already in our hands," Pascua explained. "We didn’t want to overspend so we needed to know immediately how much actual cash we had and could spend."

As the deficit ballooned in 2002, Pascua said the government wanted to make sure that allocations under the Internal Revenue Allocation law for local governments would be based solely on how much cash was coming in.

Pascua said that non-cash revenues were reflected in the budget but only as a footnote to indicate that the government should have collected a certain amount of revenues but was spending the same amount on tax subsidies.

According to Pascua, the proposal approved by the DBCC was to reverse this procedure and reflect both cash and non-cash revenues but to carry a footnote indicating how much of the total revenues were actually cash.

Pascua said IRA allotments would still be based on actual cash on hand and fund releases to line agencies would still be based on their actual performance.