The fiscal space expanded by the implementation of the Tax Reform for Acceleration and Inclusion law enabled the government to boost investments and growth in the first half, the Finance Department said over the weekend.
The agency said in an economic bulletin the national government’s capital outlays in the first semester expanded 42.4 percent in nominal terms, boosting GDP growth by almost a percentage point.
Government current expenditures also rose 26.6 percent, contributing an incremental 1.16 percentage points to growth.
The second-quarter expansion of 6 percent, however, was slower than the revised 6.6-percent growth in the first quarter. This brought the first-half GDP growth to 6.3 percent, below the government’s target range of 7 percent to 8 percent.
“Strong macroeconomic fundamentals backed by tax reforms and the ‘Build, Build, Build’ program will continue to boost economic growth as the competitiveness of the economy rises and more jobs are created,” the DoF said.
Data also showed that the national government revenues increased 19.9 percent in the first semester, as the first phase of the Train law took effect in January. This was more than twice the nominal GDP growth which reached 9.6 percent during the period.
Tax revenues grew 17.4 percent in the first six months, with the Bureau of Internal Revenue collections rising 13.7 percent and the Bureau of Customs collections growing 32.9 percent, both exceeding the 9.6-percent nominal GDP growth.
“This is due to Train 1 and improved tax administration,” the DoF said.
Non-tax revenues rose 45.1 percent on higher dividend remittances from government-owned and controlled corporations.
Higher collections from other offices also contributed to the increase, which included the one-off transfer of P13.5 billion in bond proceeds from the United Coconut Planters Bank for the Coconut
Industry Investment Fund. Excluding the transfer, this would still show improved collection from other offices.
Revenue effort rose 1.47 percentage points to 17.12 percent, the highest ever achieved during the first semester.
Tax effort also increased 1.01 percentage point, from 14.22 percent to 15.23 percent, similarly the highest first semester tax effort ever achieved.
“Almost a half or 0.4 percentage point is due to Train and the rest or 0.61 percentage points to tax administration improvements,” the DoF said.
Expenditure effort rose 1.77 percentage points to 19.47 percent, the highest first semester expenditure effort since 2003, thus boosting its contribution to GDP growth.
The national government deficit settled at 2.34 percent of GDP in the first half, lower than the target.