RP MAY OVERSHOOT BUDGET DEFICIT TARGET
MANILA, JULY 5, 2007 (STAR) By Des Ferriols and Paolo Romero - The government may overshoot its first semester budget deficit target by about P6.4 billion due to poor tax collections but fiscal targets for 2007 will be maintained despite the “daunting” task of raising revenues for the rest of the year, Finance Secretary Margarito Teves said yesterday.
Teves made the disclosure after President Arroyo cracked the whip on her finance and revenue officials during a two-hour meeting with members of the Development Budget Coordinating Council (DBCC) in Malacañang.
“We’re likely to breach the first half deficit target by about P6.4 billion,” Teves said.
The dismal fiscal performance for the first six months of the year is feared to generate a backlash on public spending that executive officials hoped to address by selling assets and running after tax evaders.
The Arroyo administration is projecting its first semester budget deficit to reach P37.7 billion, about P6.4-billion short of the programmed deficit of P31.2 billion.
Teves said the Department of Finance (DOF) incurred a P53-billion shortfall in tax revenues from both the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR), widening the expected shortfall for January to June.
Despite the hard task of meeting the yearend fiscal targets, Teves said government spending will not be reined in as Mrs. Arroyo also gave instructions that social and infrastructure expenditures should not be touched.
The President also directed Teves, BOC chief Napoleon Morales, and BIR officer-in-charge Lilian Hefti that the campaign against frauds and tax cheats — Run After Tax Evaders, Revenue Integrity Protection Service, and the Run After Smugglers — should result in prosecutions and convictions.
She also ordered revenue officials to closely look into the country’s oil imports as “she felt that it (trend in importations) is counterintuitive that at the time when the economy is growing, oil imports are declining,” Teves said.
Despite the failure to meet the first semester fiscal targets, however, Teves said the Arroyo administration is keeping its full-year deficit target of P63 billion.
“I think it has been in the tax revenues where we are having some challenges. Our agreement (in the DBCC meeting) is to live within the P63 billion deficit target (for 2007),” he said.
According to Teves, the government would have to rely on realizing the proceeds from the sale of its big-ticket assets, including its shares in San Miguel Corp estimated to be worth over P50 billion.
Despite the dismal fiscal figures, the government was able to save P20.2 billion from interest payments on government’s outstanding debt.
Sources from the Development Budget Coordination Committee (DBCC) said that interest payments reached only P129.7 billion against the programmed amount of P149.9 billion.
As a result, the first semester shortfall was actually an improvement from the P41.763-billion deficit for the first five months which put the Arroyo administration P10 billion over its deficit target for the whole six-month period.
DBCC sources said revenue collections in the first six months went up by 8.2 percent to P509.7 billion.
During the Malacanang briefing, sources said President Arroyo issued directives to expedite various tax evasion and corruption cases that would yield additional revenues.
The Run After Tax Evaders (RATE) program of the Bureau of Internal Revenue (BIR) said it had six major and high-profile cases.
The Revenue Integrity Protection Service (RIPS) of the DOF, on the other hand, reported that it had filed 39 cases against various malpractices within revenue agencies.
For the whole year, tax revenues are projected to fall P25 billion short of the P1.003-trillion target which would cause the Arroyo administration to miss its full-year total revenue target by P15 billion.
The emerging estimates are based on what officials called the best-case scenario where some recovery was expected from the shortfalls of the BIR and to a lesser extent, the BOC.
Emerging estimates from the DBCC showed that based on the first semester numbers, total revenues are projected to reach only P1.094 trillion against the full-year target of P1.119 trillion.
Of this total, revenues from taxes are projected to reach only P978.416 billion, over P50 billion short of the full-year target of P1.028 trillion.
Based on the projections, the BIR is expected 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 fall 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.
Chief News Editor: Sol Jose Vanzi
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