The government’s tax expenditure fund (TEF) is expected to amount to P55.38 billion this year, higher than programmed of P44.9 billion due to additional budgets requested by state-controlled corporations such as the National Food Authority, National Power Corp. and the Bases Conversion Development Authority.

Based on data from the Department of Finance, the emerging TEF as of mid-September is 23.3 percent more than originally projected.

TEFs are appropriated budgets but government owned and controlled corporations (GOCCs) can make additional tax subsidy requests to the Department of Budget and Management when needed. These funds are used to support the tax expenditures of government agencies and GOCCs.

As of end-August, tax expenditure subsidy totaled P36.85 billion, of which P20.63 billion are in the books of the Bureau of Customs while P16.23 billion were recorded by the Bureau of Internal Revenue.

NFA has the biggest cut in the TEF budget of about P25-27 billion in the first eight months from its rice imports.

The tax subsidy exceeded the first half program because of additional requirements by NPC of P5.3 billion for its 2006 and 2007 value added tax liabilities. BCDA also took out P2.8 billion tax subsidy for its Subic-Tarlac Expressway project.

In the case of the NFA, the tax support covers the 50-percent tariff imposed on all rice imports. This has no impact on the national accounting because these import-related taxes are considered “wash.”