MANILA - Poor tax collections have left the government with no other recourse but to rely on non-tax revenues to keep this year’s budget deficit within limits.

Finance Secretary Margarito B. Teves admitted that keeping the deficit within the P250-billion cap would be "extremely difficult" if non-tax revenues like dividends from state-run firms and asset sale proceeds, do not materialize.

"I must admit it is increasingly difficult given the official figures as of August. The deficit [has reached] P210 billion. What made the situation more difficult is the need to address the various unfavorable effects that have taken place after [tropical storm] Ondoy," he told reporters last Friday.

"We know we have fallen short of the tax revenues. We are trying to cover this with our non-tax revenues. [These are] revenues that we did not anticipate or are likely to happen, or those that hopefully will happen."

The Finance chief said among the non-tax revenues the government is counting on are the sale of natural gas by the Energy department to the Philippine National Oil Co. (PNOC), dividends from state-run firms, and proceeds from the sale of the government’s stake in San Miguel Corp. (SMC).

"What if these do not happen? Of course, it’s going to be extremely difficult. It is likely that we will come in a situation where we will breach the P250 billion [ceiling]. As far as I’m concerned right now, we still have three months to go. I’d rather that we maintain our projected budget deficit of not more than P250 billion," Mr. Teves said.

Finance Undersecretary Jeremias N. Paul said the Energy department (DoE) last month sold P14.4 billion of natural gas to the PNOC. "The one that owns the gas is DoE. The DoE remitted P14.4 billion to the Treasury. This will be reflected in the September [revenue tally]," Mr. Paul said, clarifying that the sale has not been incorporated in the government’s targets.

Mr. Paul said they are also asking state-run corporations and financial institutions to remit more dividends to the National Government.

"What we are doing is we are asking the corporations [to give dividends]. Instead of the usual 50% [of their net income, as provided by the dividends law], we are asking for more," he said, citing the need for more funds to rehabilitate areas affected by "Ondoy."

Urgent need

"In a situation right now, we have to go to a maximum 100% [of their net income]. There are things that came about and we need the money and put them on projects that our people need right now. Hopefully, the agencies will understand that this is an emergency situation and we need more funds as possible."

Mr. Paul said among the firms that remitted huge dividends last month were the Land Bank of the Philippines and PNOC, which gave P1 billion each, and the Development Bank of the Philippines, which gave P393 million.

Republic Act 7656, or the Dividends Law, requires government-owned and -controlled corporations and financial institutions to remit half of their net income to the National Government.

Mr. Teves said the government is hopeful that the Supreme Court will allow the government to sell its shares in San Miguel, estimating this would bring in at least P50 billion to state coffers

"We are still hoping that the proceeds of the San Miguel [share] sale would be realized. A favorable [Supreme Court] decision will allow us to sell [the shares]. The numbers range from P50 billion [sic]. We did not include this in our program for 2009. If that happens, the comfort level will be higher that we will be within P250 billion," he said.

Mr. Teves said they are also counting on proceeds from the sale of state assets, which is expected to hit P30 billion this year.

Chronic weakness

Tax collections, which have been persistently weak, have not only missed targets but have actually dropped this year, so far. The Bureau of Internal Revenue, which accounts for three-fourths of tax revenues, netted P500.8 billion as of August, down from last year’s P532.1 billion. The Bureau of Customs collected P147.1 billion in the same period, compared to P167.5 billion last year.