Privatization boosts RP revenue effort to 17.2% in first 9 months

Hefty proceeds from the government’s privatization program pushed the country's revenue effort to 17.2 percent of gross domestic product in the first nine months of the year, Finance Department Data showed. The privatization proceeds made up for huge collection shortfalls incurred by both the Bureau of Internal Revenue and the Bureau of Customs. Total revenues raised by the national government in the first nine months of the year grew 13.5 percent to P812.26 billion, compared to the country’s nominal GDP amounted to P4.731 trillion in Jan-Sept. This as non-tax revenues consisting of dividends from state-run companies, fees and charges, interest on deposits and advances as well as proceeds from privatization soared 57.6 percent to P129.15 billion. Of this, P42.39 billion came from privatization proceeds in the first nine months of the year. Assets sold include the government’s 46 percent stake in Philippine Telecommunication Investments Corp. worth P25.2 billion, its 20 percent interest in PNOC – Energy Development Corp. worth P16.6 billion, the 60-hectare old Iloilo airport worth P1.2 billion, and the remaining 4.6 percent stake in Philippine National Bank (PNB) worth P998 million. Proceeds from privatization is expected to double after it booked the P47 billion windfall from the sale of its remaining 60 percent stake in PNOC-EDC to a consortium led by the Lopez-owned First Gen last November. However, governments revenues from tax collection fell to 14.4 percent of GDP from 14.7 percent of GDP as tax revenues raised both by the BIR, the BOC, and other offices reached only P633.8 billion. In the first nine months, the BIR's tax effort fell to 11 percent of GDP from 11.1 percent of GDP in the same period last year. On the other hand, the tax effort of the Customs dropped to 3.2 percent from 3.4 percent. Aside from aiming to achieve a balanced budget by the end of 2008, the administration of President Gloria Macapagal Arroyo is trying to restore the country’s revenue and tax effort to pre-Asian Financial Crisis levels. The government’s tax effort fell steadily from a high of 17 percent of GDP in 1997 to 12.4 percent of GDP in 2004. The BIR tax effort plunged from a high of 13 percent in 1997 to 9.7 percent and back to 10.8 percent in 2006. Multilateral lending agencies led by World Bank, Asian Development Bank, and International Monetary Fund, as well as rating agencies such as Standard and Poor’s, Moody’s Investor Service, and Fitch Ratings want the Philippines to improve its tax effort. Ratings agencies, in particular, have criticized the government's reliance on its privatization program to generate revenues. - GMANews.TV