MANILA, Philippines - The government is on track to meeting its revenue effort target as of November last year, the chief economist of the Department of Finance said.
Finance Undersecretary Gil Beltran said total revenues accounted for 15.98 percent of gross domestic product (GDP) for the first 11 months of 2015.
The figure, known as revenue effort, measures the proportion of revenues collected by the government as the economy grows. Theoretically, a fast-growing economy means more revenues earned.
According to the Aquino administration’s fiscal program, the revenue effort target for last year was set at 16.3 percent. In 2014, revenue effort registered a below-target 15.11 percent
“Revenue effort could go down or up depending on the performance of the economy and collections, Beltran said in a text message.
Beltran’s estimates compared the 11-month revenue collections with GDP figures from January to September. The full-year economic report will be released later this month.
GDP is the sum of all products and services created in an economy. If GDP accelerates faster in the fourth quarter than revenues, Beltran said the figure may go down. The opposite could happen if the latter rose faster.
GDP expanded 5.6 percent in the first nine months of 2014. Revenues, meanwhile, rose 12.1 percent from January to November.
Of the total revenues, Beltran said taxes cornered 13.72 percent of economic output during the same period. The tax effort target for last year was set at 15.3 percent.
Broken down, the bureaus of Internal Revenue (BIR) and Customs recorded tax effort of 10.9 percent and 2.71 percent, respectively. The BIR and Customs account for about 90 percent of state revenues.
For last year, the BIR aimed for 12 percent, while Customs targeted 3.1 percent.
The deficit accounted for only 0.38 percent of GDP against a two-percent cap. The deficit-to-GDP ratio gauges if the government is spending too much versus what the economy is producing.