MANILA, Philippines – The government is looking at a budget deficit of P293 billion next year, higher than the initial estimate of P233.4 billion, Finance Secretary Margarito Teves said yesterday.
Teves, who attended a Cabinet meeting in Baguio City yesterday, said losses from revenue-eroding measures being implemented by Congress are expected to bloat next year’s deficit.
“P293 billion is the emerging deficit for 2010,” Teves said in a telephone interview.
The P293 billion which is 3.5 percent of gross domestic product (GDP) is just slightly lower than the emerging budget deficit scenario for 2009 of P298 to P300 billion. A P300 billion deficit is 3.9 percent of GDP.
Teves said the P293 billion emerging 2010 deficit took into account the “lower revenue base in 2009.”
As of end-November 2009, the government’s budget deficit has already swelled to P272.5 billion, more than four times the P66.7 billion incurred in the same period last year mainly because of weak revenues.
During the 11-month period, revenues reached only a total of P1.021 trillion, down by 5.5 percent from the comparative period last year of P1.081 trillion while expenditures rose by 12.7 percent to P1.294 trillion from P1.148 trillion disbursed in the same period last year.
To shore up revenues, Teves expressed hopes that Congress would also approve pending revenue measures being pushed by the DOF, on the back of the implementation of several “revenue-eroding measures.”
The Finance department is pushing for the approval of the measures seeking to raise taxes on alcohol and cigarettes, the measure seeking to raise the country’s net income taxation system and the measure seeking to rationalize fiscal incentives given to local and foreign investors.
On the other hand, according to estimates made by the DOF, P60 to P65 billion are lost yearly because of revenue-eroding measures approved by Congress.
These measures include the lowering of the corporate income tax rate to 30 percent from 35 percent which is expected to translate to revenue losses of P15 to P20 billion yearly.
Another measure is the Minimum Wage Law which exempts minimum wage earners from income taxes. The government expects to incur losses of roughly P26 billion a year from this measure.
The National Tourism Act, meanwhile, is estimated to translate to P3 billion in foregone revenues.
Another measure, the imposition of franchise tax on power transmission in lieu of all national and local taxes, is expected to leave a dent on state coffers amounting to P9 billion a year.
The so-called Personal Equity Retirement Account (PERA) Act of 2008, a tax-free pension scheme for retiring individuals, is estimated to cost the government P7 billion yearly.
To raise funds, the government is banking on the privatization of state-owned assets next year. It hopes to raise P13 billion from the Food Terminals Inc. property in Taguig and roughly P15 billion from the sale of its 60 percent stake in Philippine National Oil Company-Exploration Corp.
Thus, next year’s privatization program has been raised to P30 billion from P12.5 billion previously. –Iris C. Gonzales (The Philippine Star)