BIR, BOC expect significantly higher collections this year

MANILA, Philippines - The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) are expected to collect more this year, significantly higher than their respective targets of P830 billion and P275 billion as the economy is expected to sustain its strong first quarter performance.

However, the government has yet to assess whether or not there would be a corresponding adjustment in the budget deficit ceiling of P293 billion.

The interagency Development Budget Coordination Committee (DBCC), the group that sets the country’s macroeconomic assumptions and targets, is scheduled to meet next week for the corresponding adjustments in the different macroeconomic assumptions, starting with the economic growth assumption for the year.

An official of the National Economic and Development Authority (NEDA) has said that the government is considering a “substantial upward revision” to this year’s economic growth target following a strong first quarter performance.

“Second quarter and beyond may be looking good. We are looking at substantial upward revision from the conservative 2.6 to 3.6 percent (target for the year),” National Economic and Development Authority (NEDA) director Dennis Arroyo has said.

However, Finance Undersecretary Gil Beltran said that a substantial adjustment in the economic growth projection for the year may not necessarily lead to higher targets for the BIR and the BOC but only an adjustment in the expected revenues of the two agencies or the so-called “revenue assessments.”

“They may be adjustments in the assessment of the revenues of the BIR and the BOC but not the targets,” he said.

This nonetheless means that the BIR and the BOC are expected to be generative revenues that are significantly above their targets.Estimates made by the Department of Finance showed that for every one percentage point movement in gross domestic product, there is a corresponding adjustment in revenues amounting to P13 billion.

Socioeconomic Planning Secretary Augusto Santos said last week that 3.6 percent would likely become the “lower end” of the new growth goal for 2010.

Officials are optimistic of higher growth this year because of the strong first quarter growth of 7.3 percent — the economy’s best performance since the second quarter of 2007. Officials attribute this to election-related spending, better-than-expected trade performance and a strong rebound in factory output.

However, despite this, Beltran said it was too early to say whether or not the government would also adjust the deficit ceiling downward or narrower than the P293 billion set for 2010.

“There are some revenues that are not affected by GDP such as revenues from privatization,” he said.

The government has been trying to raise P30 billion from privatization of state-owned assets but has not made significant progress on this.