Just a lofty dream
PRESIDENT Arroyo’s ambitious spending program outlined in her State of the Nation address (SONA) runs the risk of losing steam if the government’s key revenue-generating agencies fail to hit their collection targets.According to the President, she aims to fund her P1.7-trillion Medium-Term Public Investment Program partly through state revenue which, at P1 trillion, comprises the bulk of her funding requirements.
It is unfortunate therefore that she devoted several pages on where projects taxpayers’ money is being spent on, but only a paragraph on how the Bureau of Internal Revenue (BIR), which accounts for at least two-thirds of public revenues, would boost its collections.
How the real-time Revenue Watch Dashboard, as well as the LGU Revenue Assurance would show us the money was left to everyone’s imagination. Worse, the implementation of these measures “before heads would roll per [Rep. Danilo] Suarez’s Attrition Law” sends the wrong signal to BIR and Bureau of Customs personnel that they need not fear the very law that penalizes their failure to hit collection targets.
We reiterate our suggestion that the government not stop at the sacking of the BIR chief. Exemplary justice should be served on everyone responsible for the first-half collection disappointment.
Obviously, “firm orders to BIR and Customs to hit their targets” failed to work their wonders in the first six months of the year. As a result, the government may be unable to keep its budget deficit below the P63-billion ceiling.
The World Bank earlier put it in the starkest terms when its outgoing country chief said that the Philippines’ fiscal reform program has “stalled,” and that failure to correct its recent path would squander years of fiscal restraint and the citizenry’s sacrifice. The past several years of below-standard public expenditures left ordinary Filipinos to fend for themselves.
Without the improvement in tax collections, something has to give: either the government cuts down on its ambitious list of projects, or it borrows more to make up for the collection shortfall. That is how we view the government’s recent sale of retail Treasury bonds (RTBs). Looking past the helping-the-small-investor-save hype, the auction of RTBs was nothing but the government racking up more debt to finance its expenditures. This was how we managed to spend so much in the first half, if we were to believe official borrowing data.
The Department of Finance’s plan to undertake a selling bonanza of remaining state-owned assets, including equity in San Miguel Corp. and Philippine National Oil Co.-Energy Development Corp., may give the government enough to tide it over this year. But that’s about it. As many pundits have said, asset sales are unsustainable because time will come when the government would no longer have anything valuable to offer. And remember, the medium-term investment plan will span the next three years.
Much as the President would like to think that we’re past our fiscal problems, which is what a close reading of the SONA would uncover, the hard truth is that we’re barely out of the woods.
The truth hurts and denial is a usual refuge, which is why the SONA was almost silent about the government’s renewed fiscal straits. The balance of P700 billion required by the medium-term investment plan won’t materialize if the private sector and foreign donors fail to get a clearer signal on how the government intends to get back on course to fiscal reform.
We can talk all we want about our vision for the country 20 years hence, but this will remain a lofty dream without the hard cash required to turn this to reality.
