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The
ever-popular Sen. Chiz Escudero, chairman of the Senate
ways and means committee, correctly points out that
Malacañang has no reason to gloat over the 2007 fiscal
performance, despite its bold prediction that a budget
surplus would be booked for the year.
After
all, as Senator Escudero notes, such performance can be
attributed more to the sale of government assets to the
private sector, also known as privatization, rather than
the improvements in the collection of taxes or an
increase in the tax effort—tax collection as a
percentage of the goods and services produced by the
economy over a specific period of time.
The
Arroyo administration had targeted to keep last year’s
budget deficit to below P63 billion. But President
Arroyo reportedly hinted last week that a surplus was
actually in the offing, perhaps largely through proceeds
from the privatization of big-ticket items like the
geothermal assets of state-run PNOC EDC, which
reportedly earned the government over P70 billion.
Senator
Escudero noted that as of November 2007, the sale of
prime state assets raised an estimated P90.5 billion for
the state, way above the P25.2-billion target for the
year. At the same time, the government intentionally
clamped down on spending, he noted. Thus, with more
money earned (from prime-asset sale and not taxes) than
spent, a budget surplus loomed. He also questioned the
practice of booking as revenues all budget
appropriations to state agencies that were used for tax
payments, which he claimed totalled P27.5 billion as of
November last year.
But in
fairness to the Arroyo administration, since
independence in 1946, the Philippine government has
always been short of money. A budget deficit is more the
rule than the exception, and that on few occasions that
the budget was either balanced or in surplus,
privatization was surely the cause rather than better
tax collection. Improving tax collection, or minimizing
if not eliminating corruption and tax evasion, is
obviously easier said than done. Many administrations
have tried but failed to achieve anything significant in
this department.
Moreover, it’s fairly easy for an opposition senator to
question a sitting administration on the matter of
fiscal performance. The administration will always be at
a disadvantage, all things considered. After all, the
responsibility to perform lies with the administration
and not the opposition. But lawmakers, whether
administration or opposition, should likewise be held
accountable for fiscal performance for the simple reason
that the main driver of revenue performance—taxation—is
the prerogative of Congress through legislation. Simply
put, the executive can collect only the taxes legislated
by Congress. As chairman of the Senate ways and means
committee, Senator Escudero is likewise responsible and
accountable for fiscal performance under any
administration. But in the end, it makes no difference,
really, on who did what. Bottom-line question is whether
or not the budget surplus actually benefits the country.
Along
this line, perhaps Senator Escudero’s committee can
start looking at some of the proposals of the business
sector on improving tax collection. The Philippine
Chamber of Commerce and Industry, or PCCI, is reportedly
calling for the legislation of new taxes that would give
“more weight on taxing sin, luxury and nonessential
products and services,” including the controversial
proposal to tax short messaging system or texting on
mobile phones.
PCCI
chairman emeritus Donald Dee, in a news report, was
quoted as saying revenues from these new tax measures
could support sectors badly affected by the continuous
rise in the prices of oil and the weakening export
market due to the strengthening of the peso. This would
also mark the crucial shift in tax policies that rely
heavily on corporate and income taxes. He said, “Sin tax
is a key measure that requires strong political will and
efficiency in tax collection and administration.
Products under this wing are considered to be
nonessentials; consumers of these products must be
willing to pay a premium in availing [themselves of]
them to help the domestic economy and the various
sectors affected by significant movement in oil prices
and peso appreciation.”
PCCI’s
Dee also said that aside from cigarettes, spirits and
liquors, there should likewise be an increase in the
levies and registration fees on luxury cars, private
jets and yachts, and other luxury items that were deemed
unnecessary to everyday living. He also reportedly made
reference to a World Health Organization report that the
cigarette tax in
Singapore
was equivalent to $192.56 per 1,000 sticks, and in
Brunei,
$39.30; in Malaysia, $23.29; while in the Philippines,
only $2.42 to $29.28 per 1,000 sticks.
What
PCCI’s Dee failed to mention was that cigarette and
liquor makers were among the biggest congressional
lobbyists in the Philippines. But perhaps Senator
Escudero, as chairman of the Senate ways and means
committee, can do something about the PCCI proposals.
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