MANILA—The National Economic and Development Authority (NEDA) expects that the country’s strong fiscal performance from 2010 to 2012 will continue beyond 2016 with the passage of priority legislative measures.
Citing the Socioeconomic Report (SER): 2010-2012 recently released by the NEDA, Socioeconomic Planning Secretary Arsenio M. Balisacan explained that the fiscal sector’s overall strategy is still to increase tax effort through better revenue collection.
“Achieving our revenue targets depends heavily on several factors, including the approval of tax reform laws. These, in turn, would reduce our deficit as a share of our economy, as measured by the gross domestic product (GDP),” said Balisacan, who is also NEDA Director-General.
Balisacan said that among the pending bills that are expected to benefit the fiscal sector once signed into law are the simplified net income taxation scheme, modernized customs and tariff code that includes strengthened anti-smuggling provisions, and rationalized fiscal incentives.
The Cabinet official noted that the sin tax bill, which restructured excise taxes on alcohol and tobacco products, was already signed by President Benigno S. Aquino III into law as Republic Act 10351.
“According to the SER, overall revenue in 2011 was highest for the past decade even without new taxes and significant asset sales. This means that reforms in tax administration, including the passage of the sin tax law, will provide the ground work to support fiscal sustainability in the coming years,” said Balisacan.
The SER reported that the country’s revenue and deficit levels are on track towards achieving their targets as articulated in the Philippine Development Plan: 2011-2016.
The report said that collection effort of Bureau of Internal Revenue (BIR) rose from 9.1 percent of GDP in 2010 to 9.5 percent in 2011 and 10.3 percent in the first half of 2012, while nontax revenue collection rose from 1.3 percent share of GDP in 2010 to 1.6 percent and 1.8 percent in 2011 and first semester of 2012, respectively.
“In the medium term, we remain committed to bring down the country’s deficit and debt to manageable levels,” the NEDA official said.
As to the country’s debt situation, Balisacan cited the SER which reported that the debt-to-GDP ratio has fallen from 52.4 percent in 2010 to 50.9 percent in 2011.
“By the first half of 2012, the outstanding debt-to-GDP ratio further declined to 47.1 percent due to our government’s fiscal restraint and prudent debt management. We hope to continue this downward trend until we attain our targeted ratio of 42.8 percent by 2016,” said Balisacan.
Apart from the implementation of critical reforms, the socioeconomic planning official said that the government will continue to monitor other factors that promote a healthy fiscal situation in the country. These include the attainment of macroeconomic targets, such as GDP growth, inflation, exchange rate, merchandise imports growth, treasury bill rates, and efficient tax administration.
“Any development involving these variables will impact on the fiscal targets,” he said.
The SER is an assessment of the first two years of the Aquino administration in relation to the targets and strategies set in the PDP 2011-2016.