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Written by: Staff

MANILA, Apr 18 (Reuters) The Philippines' Bureau of Internal Revenue (BIR), which delivers more than two-thirds of government revenue, beat its collection goal by nearly 2.6 percent in March, the head of the agency said on Tuesday.

The BIR collected 43.7 billion pesos ($852 million) last month, higher than its target of 42.6 billion pesos, Commissioner Jose Mario Bunag said.

That brought the agency's total collection for the first quarter to 135 billion pesos, 2.7 percent higher than its goal for the period of 131.4 billion pesos.

''We've been monitoring taxpayers in each and every region, making sure they pay,'' Bunag told Reuters, adding the imposition of a broader sales tax last year and a higher sales tax rate in February had helped lift revenues in the first quarter.

The Philippine government, Asia's most active issuer of sovereign bonds after Japan, had a budget deficit target of 71.8 billion pesos in the January-March period. It is set to announce its fiscal performance for the first quarter on Wednesday.

In November, the government widened the value-added tax (VAT) to include previously exempt sectors such as oil and power.

In February, it raised the VAT rate to 12 percent from 10 percent, completing a key reform measure that is expected to bring in extra revenue of 75 billion pesos this year.

The Philippine budget deficit is closely watched by financial markets because of the government's relatively high debt levels and chronically weak revenues.

The state's collection agencies are battling corruption, evasion and lax implementation of tax laws as they try to shore up revenues and aim for a balanced budget by 2008.

The BIR has a target for collections in April -- the month of annual income tax payments -- of about 79 billion pesos.

Monday was the last day for filing tax returns.

''We will try our best to make it. It sets the tone for the balance of the year,'' Bunag said of the April tax goal.

In April 2005, the Philippines had a budget surplus of 3.3 billion pesos, its first in four years. There were also surpluses in June and August of last year.

The government wants to narrow this year's budget deficit to 125 billion pesos or 2.1 percent of gross domestic product from a shortfall of 146.5 billion pesos or 2.7 percent of GDP last year.

($1 = 51.3 pesos) REUTERS PV SND1454

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