THE government need not resort to “fly-by-night” subsidies that are “shallow, low-impact and unsustainable” if the government would only follow the laws that earmark portions of revenue from these laws and mandate their allocation for social services.

Sen. Pia Cayetano asserted this on Monday, hours before President Arroyo pitched her government’s National Social Welfare Program in her State of the Nation Address and gave an accounting of disbursements made under the so-called  windfall profits, or Katas ng VAT program.

These earmarks, mandated by law, but ignored for the past three years by the economic agencies, include profits from the reformed value-added tax (R-VAT) and the sin taxes law, said Cayetano.

The accounting rendered by Malacañang Palace, meanwhile, was also pooh-poohed by independent think tank IBON, which cited data showing only a trickle of the VAT was going to genuinely propoor programs.

The administration’s Katas ng VAT is a pretense to cover up how the largest part of the VAT revenues “do not go to social programs but rather to paying off debt, militarism and political patronage to prop up President Arroyo’s unprecedented unpopular rule,” said IBON.

The government, it said, “deceitfully lumps together the share of social services with infrastructure in R-VAT revenues when it reports on the share going to social programs to make these appear larger than the reality.”

The government claims that 40 percent of R-VAT revenues in 2008 will go to “social services and infrastructure,” but it is still unclear how much will really go to social programs, said IBON.

For instance, said IBON, the Department of Finance said that, in 2006, “30 percent, or P23.5 billion [of additional R-VAT revenues] went to social and infrastructure expenditures.”

However, the actual amount that went to social services was just P8.4 billion: health programs (P2.7 billion); resettlement and housing programs (P2 billion); educational and training programs (P1.9 billion); hunger mitigation programs (P1.8 billion); This means that only 11 percent of additional revenues from R-VAT went to social programs.

In criticizing the tack to encourage subsidies instead of pouring in the funds into earmarked purposes as mandated by law, Cayetano said the administration is institutionalizing doleouts, more so with the vaunted “national social-welfare program” that will be supervised by a new council she created. This will be headed by incoming Social Security System (SSS) chief Romulo Neri.

Cayetano reiterated her call to the President, and the departments of Finance and of Budget and Management, to immediately release the amounts earmarked for health, education, environment and agriculture under Republic Act 9334 (sin tax law) and RA 9337 (expanded value added Tax), instead of engaging in short-term subsidy programs such as Katas ng E-VAT.

Under Section 7 of the sin tax law, 2.5 percent of incremental VAT revenues should go to increasing universal coverage under PhilHealth; and another 2.5 percent to the disease prevention fund of the Department of Health.

Under Section 21 (D) of the E-VAT law, the government must allocate 50 percent of the share of local government units from incremental revenues of E-VAT to the following: 15 percent for education; 10 percent for the health-insurance premiums of enrolled indigents under PhilHealth, 15 percent for environmental conservation; and 10 percent for agricultural modernization.

“Unlike the current doleout programs, these earmarked funds are clearly mandated by law and could benefit the people on a sustained basis,” added Cayetano, who chairs the Senate health and environment committees.

Cayetano deplored how her repeated follow-ups with Finance Secretary Margarito Teves and other concerned agencies has met with silence. “It’s evident that not a single centavo has been released under the social earmarking provisions three years since the passage of these laws.”

IBON, meanwhile, said the administration’s lack of concern for social programs is even underscored by how it is not even using the whole amount of windfall R-VAT revenues due to high oil prices for supposedly “propoor” programs.

Based on the administration’s announcements on the Katas ng VAT so far, only P9.3 billion, or just half of the estimated P18.6 billion, in windfall RVAT revenues is going to subsidies. This leaves another P9.3 billion unaccounted for, inasmuch as another P2 billion in “subsidies” that had been hyped are merely loans still to be repaid, said the think tank.

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THE government need not resort to “fly-by-night” subsidies that are “shallow, low-impact and unsustainable” if the government would only follow the laws that earmark portions of revenue from these laws and mandate their allocation for social services.

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