The government allotted P34.34 billion of tax expenditure subsidy in the first seven months to July, higher than what was released same time in 2008.

The Department of Finance (DoF) expects a higher tax expenditure fund or tax subsidy this year of P50.3 billion, more than the budget department’s P44.9 billion program.

This year the government expects tax subsidy of P35.33 billion from the Bureau of Customs and about P15 billion from the Bureau of Internal Revenue. As of July, BoC reported P15.3 billion tax subsidy while BIR had P19 billion.

On a monthly basis, July’s P5.3 billion tax expenditures is lower compared to June’s P13.16 billion.

Government’s tax subsidies have no impact on the national accounting because these import-related taxes are considered “wash.”

These subsidies, for example, covers the 50 percent tariff imposed on all rice imports and enables the National Food Authority to save more than P10 billion a year in import costs.

Last year, the government’s total tax expenditure fund amounted to P58 billion, more than double the original program of only P25 billion, mainly because of the higher NFA rice imports for the period to avoid a supply shortage in the first quarter of 2008.

Tax subsidy is included under government’s expenditure fund, which as of July has reached P832.14 billion.

The biggest of government expenditures were interest payments on past debts totaling P183.7 billion followed by allotment to local government units of P151 billion for the first seven months.

Other expenditures besides tax subsidy are subsidy released to government-owned corporations and banks, which amounted to P10.5 billion as of July, excluding advances of almost P6 billion.