MANILA, Philippines – Tax expenditures spent by the government fell in October, their lowest in four months – and are on track to hit their lowest levels in a decade.
According to data from the Bureau of the Treasury, tax expenditures reached P66 million last October, down 90.66 percent from P707 million in the same month a year earlier.
This was the lowest amount recorded since the P32 million recorded last June.
In an earlier interview, Emilio Neri, Jr., economist at Bank of the Philippine Islands, said the declining tax expenditures could be traced to lower commodity prices.
“Imports are down because of low oil prices and VAT (value-added tax) collections are high. Rice prices were also hit, all have been affected by weak global sentiment,” Neri said.
Lower prices result into lower valuations where tax duties are based. Lower taxes, in turn, necessitates lower tax expenditures.
Tax expenditures are earmarked under the national budget and given to state agencies and government-owned and -controlled corporations to cover their tax obligations.
These are collected by the Bureaus of Internal Revenue (BIR) and Customs, the top revenue collecting agencies which account for a combined 90 percent of state revenues.
The transfer of tax credits from one agency to another indicates compliance with tax obligations for its transactions. The transfer, in turn, is recorded as income for BIR and Customs.
For the first 10 months of 2015, the government shelled out P8.15 billion, 40.54 percent lower than the P13.705 billion spent the previous year.
The figure is on track to hit its lowest level since 2005 when tax expenditures reached P13.32 billion.
Broken down, Customs accounted for bulk of tax expenditures from January to October with P5.17 billion, while those from the BIR reached P2.98 billion.
For Customs, the highest tax spending came from the National Food Authority, which imports rice for the government. The NFA spent P4.891 billion.
Other tax expenditures came from the departments of Transportation and Communications (P179.39 million), Health (P31.81 million), Social Welfare and Development (P26.79 million), and Public Works and Highways (P12.69 million).
For the BIR, the DOTC paid the biggest tax with P1.69 billion followed by Duty Free Philippines (P691.3 million) and Development Bank of the Philippines Management Corp. (P599.76 million).