The government is not likely to balance the budget next year because of inefficient collection by the Bureau of Internal Revenue and the Bureau of Customs according to a congressional report.

To finally end the deficit, which has plagued the government since the Asian crisis, the Congressional Planning and Budget Department said the government needs to increase collection.

It said the Congress should amend the excise tax law and reform the individual income tax system to cut disparities and generate more revenues.

The government should also consider reducing its assistance to losing state firms, the think-tank said.

The CPBD said, "There may be wisdom behind setting high targets," but with Bureaus of Internal Revenue and Customs’ collection efficiency, the "revenue targets for 2008 and consequently, a balanced budget will not be met."

The think-thank said the BIR is likely to raise just P818.3 billion in revenues, some P27 billion short of its P845-billion target, at a GDP growth of 5.6-6 percent.

With total government revenues reaching only P1.222 trillion against the programmed expenditures of P1.236 trillion, the government, CPDB said, would post a P13.3-billion deficit, instead of a balanced budget.

CPBD said Congress should revisit the excise tax law because low-priced cigarette brands are actually being sold at higher prices, causing revenue losses for the government.

Also, it pointed out, Congress should push for the simplified net income tax system to cut the huge disparity, that is 87 percent vs. 13 percent, of tax payments between salaried and self-employed individuals.

This is because employees have limited allowable deductions while self-employed taxpayers have a wider scope and their tax compliance is voluntary compared to the formers automatic.

Meanwhile, the think-tank said it should cut advances and net relining to heavily losing state firms. For 2008 alone, it said, the government is setting P12 billion in net loans (advances minus repayments) to the 14 monitored state firms.

For 2008, the government, it said, will actually be paying more domestic debts than borrowing from local investors.

But it will have a standby fund of P17.8 billion, which will bloat foreign borrowing to P125.4 billion, including the principal payments for the year of P87.7 billion.

For 2007, CPBD said the government would post a deficit of P89.7 billion, wider than the P63-billion target, as the revenue agencies would post lower revenues than program leading to total revenues falling to P1.09 trillion below the P1.12-trillion program.