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6.9% GDP Growth? Then Why Has 1Q Tax Collection Growth Rate Plummeted to only 1.8% as Deficit Swells
More signs of political economic legerdemain. While the government says the 1Q GDP was 6.9%, tax revenue growth continues to move towards the opposite direction!
Based on Bureau of Treasury data, for the 1Q 2016, tax revenues grew by only 1.79% which was the lowest level since Q1 2013. That’s because of the 7.8% crash in tax collections last March essentially negated January and February’s gains of 9.4% and 4.7% respectively.
One can blame politics to the lapses in 1Q tax collections.
Perhaps tax officials allowed lesser intake in order for corporations to fund the elections campaign. Maybe tax officials joined the elections campaign. Or tax officials were uncertain of the prospective tax policies by the coming administration. But while some of these excuses maybe valid, this won’t be enough to rationalize the decline.
That’s because falling tax collections have been a trend. The rate of growth of tax collections has been in downtrend since Q1 of 2015, or even from a longer period or from Q4 of 2012.
What a paradox: NGDP has been climbing since the low of Q1 2015 even as tax collections growth has been plunging to reach to its recent low (1Q 2016)! (see chart in upper window)
Yet tax collections look as if they mirror on the nominal topline growth rate of PSEi’s 30.
If RGDP was indeed 6.9% (NGDP 7.6%), then why has tax collections been cascading????
And the consequence of sagging tax collections and ballooning expenditures has been to enlarge the fiscal deficit.
And higher deficits would eventually lead to higher debt levels and even MORE downside pressure on the peso!
Government debt by rose by only 2.57% in the 1Q 2016 with foreign denominated debt taking the load of increase at 7.6%, while domestic debt was almost unchanged up by only +.45%.
And expect more splurges from the incoming administration to put pressure on the government’s balance sheets
6.9% GDP Growth and the Online Job Market Recession
It’s not just tax collections.
Private sector’s online hiring statistics continues to show of a job opening recession. Monster.com’s online hiring tumbled by a huge 24% last March. In the first quarter, job placements plummeted by 32.45%!
And it is not just Monster.com.
My weekly tabulation of Jobstreet.com’s numbers* has essentially mirrored Monster.com. From about 110,000 in December 2014, jobstreet’s numbers are now at around 60,000 to 62,000. That’s a collapse of about 45% from 2014. Although current levels have recovered from a low of 48,000-50,000 last January.
*Jobstreet has no official employment index so I do my own tallying
Meanwhile Jobs.db’s hiring numbers have entirely collapsed from 37,000 in April 2015 to only 70s (yes seventies) last week! In fact, jobs.db announced that it will cease operations starting June 30!
Economic boom in the face of jobs drought. Yeah right!
The only alternative explanation would be that the job hiring process has been taking place outsidethe online spectrum. Perhaps a return to traditional media advertisement (Bulletin) or through direct channels conducted through viral means. Nonetheless, such alternative job advertisement and hiring process would translate to a more inefficient and costly way of getting new employees. Will employers sacrifice profits by going for higher cost of recruitment?
If the economy has been growing by 6.9% then why has online job placements been cratering? Like taxes, the government aggregated economy wide-survey and actual economic activities simply do not square.
I will wait for PSE’s 1Q official data on its universe of listed firms.
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