MANILA, JULY 4, 2007
(STAR) By Des Ferriols - Tax revenues are projected to fall P25-billion short of the P1.003-trillion target for the whole year, causing total revenues to reach only P1.094 trillion against the full-year target of P1.119 trillion.

The emerging numbers are scheduled to be presented before President Arroyo in Malacañang today in what economic officials described as a watershed meeting that would determine the fiscal strategy for the remainder of her administration.

The dismal revenue outlook for the rest of the year would make privatization even more critical to meeting the Arroyo administration’s full-year budget deficit target of P63 billion, especially since the President has committed not to introduce new taxes.

The emerging estimates are based on what officials called the best-case scenario where some recovery was expected from the shortfalls of the Bureau of Internal Revenue (BIR) and to a lesser extent, the Bureau of Customs.

Emerging estimates from the Development Budget Coordination Committee (DBCC) show that based on the first semester numbers, total revenues were projected to reach only P1.094 trillion against the full-year target of P1.119 trillion.

Of this total, revenues from taxes were projected to reach only P978.416 billion, or over P25 billion short of the full-year target of P1.003 trillion.

Based on the projections, the BIR expects to be able to generate only P746.105 billion, falling short of its P765.9-billion target by P19.795 billion.

The BOC, on the other hand, would be about P5 billion short of its full-year target collection of P228.21 billion and collect only P223.25 billion.

Non-tax revenues, on the other hand, are expected to be on track with total collections projected to reach P115.5 billion for the whole year.

Sources told reporters yesterday that as of late Tuesday, officials were still debating about whether to tell the President it was unlikely for the BIR, specifically, to recover its shortfalls for the first six months of the year.

“The problem is that the BIR’s quarterly targets were backloaded towards the end of the year which are historically weak months for tax collection,” said one source privy with the preparations for today’s meeting. “This meeting should be a reality check to accept once and for all that we are going to miss the 2007 fiscal targets.”

According to sources, the DBCC plans to present three scenarios to the President, ranging from the worst-case scenario where the BIR’s performance is projected to continue slipping for the rest of the year.

“The best-case scenario is that there will be some partial recovery although even that would not be enough to meet the target,” said the source. “We’re still going to miss our revenue targets.”

The shortfall in revenue collections this year could lead to further compression in government spending, a trend that the country’s creditors and investors fear would constrain economic growth.

The grim fiscal outlook for the remainder of the year would make privatization even more critical to meeting the deficit target of P63 billion for the whole of 2007.

On the table are the possible sale of big-ticket items, mainly government’s shares in San Miguel Corp. which remains under litigation despite an earlier favorable ruling by the SandigangBayan.

Chief News Editor: Sol Jose Vanzi

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