Tax Relief Measures Push Deficit Up In Philippines

by Mary Swire, Tax-News.com, Hong Kong

20 May 2009

The Philippine government's fiscal deficit has risen by 300% in the past 12 months, it has been revealed.

Announcing the news on May 18, the country's Finance Secretary Magarito Teves explained that, as a result of the current financial downturn, the government is struggling with a ballooning deficit.

According to the country's Bureau of Internal Revenue (BIR), much of this decline in tax revenues has been attributed to the introduction of several new tax relief measures by the government in recent months.

In attempting to cushion the impact of the global recession with the introduction of an optional salary deduction scheme for professionals and allowing minimum wage earners to be exempt from income tax levies, the government has dented its revenue collection. Further to this, a decline in imports has also been noted, drastically reducing revenue from customs duties.

Figures released by the tax authorities show that the BIR's tax collection for the first four months of 2009 was down 6.2% on last year's figures, the Bureau of Customs' revenue collection was down 8.3% - although the Bureau of Treasury's revenue collections were up 12% on the previous year.

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