Public spending rises as government raised LGU funding

The national government spent more in July, partly due to an increased share from the national tax allotment (NTA) to the local government units (LGUs), the Bureau of the Treasury reported.

State spending went up by 5.8 percent to P486.2 billion during the month from P459.5 billion a year earlier. This brought total expenditures to P3.2 trillion from January to July, reflecting a 13.17 percent increase in government disbursements.

Spending net of interest payments inched up by 2.73 percent to P406.8 billion, while interest payments also increased to P79.4 billion in July percent due to the higher cost of financing and depreciation of the peso observed throughout the year.

For this year, NTAs were given a budget of P871 billion, 6.23 percent higher than the FY 2023 NTA share of LGUs.

NTAs are the share given by the government to LGUs out of the take from all national taxes. The size of the NTA varies each year because it represents a 40 percent share of the government revenue total from three years prior.

The July expenditures narrowed the fiscal gap by 39.67 percent to P28.8 billion from P47.8 billion a year ago, as revenue growth posted a faster increase of 11.09 percent compared to that of expenditures.

Government revenues rose to P457.4 billion in July from P411.7 billion a year earlier, while expenditures climbed to P486.2 billion from P459.5 billion.

Tax revenues rose by around 16 percent to P402.8 billion, driven by a 17 percent surge in Bureau of Internal Revenue (BIR) collections to P319.8 billion and a 10 percent increase in Bureau of Customs (BOC) revenue to P80.4 billion.

The Treasury bureau attributed the BIR’s revenue growth to the higher collections of value- added tax (VAT), income taxes, other domestic taxes, and percentage taxes.

“The growth in VAT collection was partly attributed to base effects as collections last year were lower by around two months’ worth of VAT collection with the shift from monthly to quarterly filing of VAT payments as mandated by the Tax Reform for Acceleration and Inclusion (TRAIN) Law,” it said.

On the other hand, non-tax revenues declined by 13 percent to P54.6 billion, as Treasury income contracted P19.9 billion from P50.8 billion a year ago.

“The decrease was primarily due to the BSP’s one-off remittance of P31.9 billion last year, as well as reduced income from BTr-managed funds and NG deposits. Nonetheless, BTr’s cumulative 2024 income of P183.8 billion has already surpassed the previous year’s performance for the same period by 27.81 percent,” it stated

Revenue from other offices, privatization proceeds and fees and charges rose by 188.20 percent to P34.6 billion.

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The article was originally published in Manila Bulletin and written by Xander Dave Ceballos.