FINANCE Secretary Cesar Purisima came under fire from senators for making an inaccurate presentation at the Senate Finance Committee hearing the other day during which the finance chief’s office classified certain laws passed by Congress as “negative revenue measures.”
Sen. Frank Drilon, committee chairman, cited the Real Estate Investment Trust (Reit) Law embodied in Republic Act 9856, which the Department of Finance (DOF) claimed to have cost government P2.7 billion in foregone revenues, and Republic Act 10083 creating a Special Economic and Freeport Zone in Aurora that was said to have resulted in lost revenue estimated at P3 billion.
“I suppose the secretary of Finance would want to make a correction,” Drilon said as he noted that the Reit is yet to be implemented since it took effect last year, while the Aurora Pacific Economic Zone and Freeport Authority (Apeco) do not have locators on-site yet.
Purisima, quickly acknowledging the error, admitted: “We stand corrected because that should not be in that list.”
Sen. Edgardo Angara, principal author of the Reit Law, as well as the law creating Apeco, backed suggestions by his fellow senators for the DOF to instead focus on plugging recurring leaks in revenue collection, such as smuggling, in order to improve the country’s fiscal position.
“These [Reit and Apeco] laws should not be seen as eroding the tax base. We, in Congress, studied and debated these at length before we passed them. These laws will yield enormous long-term benefits that will far outweigh the short-term loss in government revenue,” Angara, who sits as vice chairman of the Finance Committee, said.
At the same time, Sen. Loren Legarda asked the DOF chief to put the so-called negative revenue measures in proper context.
“Instead of saying that certain laws passed by Congress eroded government revenue, the DOF should also assess and quantify the benefits they generate in terms of new jobs, income and investment,” Legarda said.
The senator, in turn, asked the DOF to provide “a more multidimensional assessment of the laws we have created because to be told that what we’ve worked on for the past three years created negative revenues is not helpful not all.”
“I understand that what the DOF did is simply focus on the numbers but as we all know, life is not all about numbers and revenue losses,” she added.
At the same time, Angara warned the government against “sacrificing long-term investments to provide short-term relief.”
Angara also cautioned the Department of Budget and Management under Secretary Florencio Abad to avoid making the mistake committed by the United States government that ultimately led to the American debt crisis.
“The country should be cautious about allocating too much of its resources to welfare and too little to innovation and productivity,” Angara advised senior executive officials at the Development Budget Coordination Committee hearing the other day.
He noted that “this imbalance in spending contributed greatly to the economic problems faced by the United States today.”
