DOF’s proposed P16.01-B budget next year is lowest since 2017

Finance Secretary Carlos Dominguez III presented before senators Wednesday the proposed 2021 budget of the Department of Finance (DOF) with new appropriations amounting to P16.01 billion, its lowest since President Duterte first submitted his administration’s annual National Expenditure Program (NEP) to the Congress in 2017. 

DOF urges quick congress approval of 2021 budget
(Top News PH)

In seeking the congressional nod of the DOF’s budget for next year, Dominguez also called on senators to swiftly approve the whole General Appropriations Act (GAA) bill of P4.506 trillion for 2021 as this will prove crucial to providing the government with “the tools necessary to rebuild the economy and decisively defeat COVID-19.”

The Senate finance committee chaired by Sen. Sonny Angara endorsed the proposed DOF budget for plenary approval after only 80 minutes of questioning from several senators, who commended the DOF and its attached agencies for their   competence, hard work and prudent management of the country’s fiscal affairs in the face of the COVID-19 pandemic. 

Dominguez thanked the members of the committee for endorsing the DOF budget. “We will continue to meet or even exceed your expectations,” he said. 

In his presentation during the hearing, Dominguez said that while the DOF budget under the Duterte administration has steadily decreased since 2017, the Department continues to collect record-high amounts of revenues to support the implementation of the government’s priority programs and effectively fulfill its mandate of prudent management of the country’s finances. 

“The DOF strives to be the exemplar of prudence and fiscal discipline. Our fiscal objectives closely mirror the administration’s priority programs, especially the infrastructure modernization and other public investments intended to improve the lives of our people,” Dominguez said during the hearing. 

From P21.5 billion in 2017, the approved budget of the DOF and its attached agencies declined to P19.32 billion in 2018, and fell further to P18.89 billion in 2019.  

The proposed new general appropriations of the DOF and its attached agencies for 2021 of P16.01 billion is P2.54 billion or 13.7 percent lower than the approved budget this year of P18.55 billion, and 15 percent lower than the 2019 level.

 This is also 17 percent less than their 2018 budget, and represents a 25 percent drop from their 2017 appropriations. 

Even with declining budget levels, Dominguez said the DOF and its attached agencies pushed through with bold reforms in tax policy and administration, which resulted to a revenue effort of 16.1 percent of gross domestic product (GDP) last year—a significant improvement from the revenue-to-GDP ratio of 15.1 percent in 2015 and the government’s best performance in more than 2o years. 

With the DOF instilling corporate discipline among government-owned and -controlled corporations (GOCCs), dividend collections from these state firms in 2019 reached P69.2 billion, which is 35 percent higher than the 2018 level and more than double the amount collected in 2015, 

For the first 8 months of 2020, the DOF was able to collect the unprecedented sum of P128 billion from GOCCs, signifying the commitment of the department and the government corporate sector to contribute significantly to the COVID-19 response efforts. Dominguez said. 

Another first under the Duterte administration is the DOF’s full-fledged implementation starting last year of a fuel marking program to curb oil smuggling. 

As of September 17 of this year, a total of 12.7 billion liters of fuel have been marked, generating P132.6 billion in taxes and duties from this program to curb oil smuggling, Dominguez said. 

Dominguez said these and other reforms, along with the DOF’s prudent fiscal management policies, sustained the strong performance of the economy in 2019 and enabled the government to quickly put together a four-pillar strategy with a combined value of at least P2.06 trillion (about 11 percent of GDP) to address the COVID-19 emergency. 

For its 2021 budget, Dominguez said that on top of new general appropriations of P16.01 billion, the DOF is also proposing to spend P1.46 billion in automatic appropriations for Retirement and Life Insurance Premiums and the Special Accounts in the General Fund next year. 

The DOF’s unprogrammed appropriations in 2021 for the refund of the service development fee of the government’s Nampedai property in Japan will amount to P210 million while its budgetary support to GOCCs is P595 million.  

The support to GOCCs include a P500-million equity infusion to the Philippine Guarantee Corp. (PhilGuarantee) and P95 million for the implementation of the Specialized Tax Training and Education Management Program of the Philippine Tax Academy (PTA).

Dominguez said the BIR will receive the biggest chunk of the DOF’s 2021 budget with P9.93 billion, followed by the Bureau of Customs (BOC) with P2.58 billion.

 The Bureau of the Treasury (BTr) will get P2.16 billion; Office of the Secretary (OSec), P832.64 million; Bureau of Local Government Finance (BLGF), P341.74 million; Privatization Management Office (PMO), P82.17 million; National Tax Research Center (NTRC), P66.93 million; Central Board of Assessment Appeals (CBAA), P16.28 million, and Insurance Commission (IC), P6,000. 

Finance Secretary Carlos Dominguez III.
(File photo)

In his presentation, Dominguez also underscored the government’s historically low debt-to-GDP ratio of 39.6 percent in 2019 (down from 42.7 percent in 2015), and its 20.2 percent external debt-to-Gross National Income ratio, which is the lowest among the ASEAN-5 countries that also include Indonesia, Malaysia, Singapore, and Thailand, as among the results of the DOF’s prudent management of the country’s fiscal affairs. 

The DOF was also able to secure financing support for the country’s COVID-19 response in the amount of $9.9 billion to date to help cover the revenue shortfall from the slowdown in economic activities owing to the coronavirus-induced lockdowns. 

Dominguez said the DOF, along with the Social Security System (SSS) and the Bureau of Internal Revenue (BIR), successfully implemented through the use of digital tools, a P46-billion Small Business Wage Subsidy (SBWS) Program that benefited over 3 million workers badly hit by the coronavirus-induced global economic crisis. 

He also cited other key achievements of the DOF, including: 

·      A sustained drive to crack down on Philippine Offshore Gaming Operators (POGOs) and their service providers that evade proper taxation, which yielded P6.42 billion in taxes in 2019—a 169 percent increase from the preceding year;

·      The digital transformation program of the BIR, which introduced additional electronic channels for the filing and payment of taxes. 

       In 2019, total revenues collected through digital channels reached P1.83 trillion, representing 84 percent of the total BIR collections last year. This amount is 11 percent higher than the 2018 level and 54 percent more than in 2015. 

        Dominguez said that by 2019, there were already more electronic filers at 58 percent of all taxpayers versus 25 percent in 2015. He said this is  targeted to increase in the coming years as the BIR fully digitizes its operations; 

·      The continuing improvements in the delivery of services by the BOC through the streamlining of its operations and modernization of its infrastructure; and

·      It worked closely with the Congress in crafting the fiscally responsible Bayanihan to Heal As One law and the Bayanihan to Recover as One Act or Bayanihan 2. (DOF)