More Taxes, Less Services this Year

Published on April 29, 2006

BY ALEXANDER MARTIN REMOLLINO
Bulatlat.com

The government, said Bayan Muna (People First) Rep. Teddy Casiño, may impose additional taxes to raise the income needed to finance this year’s proposed P1.053 trillion ($20,371,445,153) national budget. In the 2006 proposed budget, the real value of the proposed budget for education and health decreased while that for debt servicing and defense increased.

With the Philippines having failed to meet its target growth in the gross domestic product (GDP) for 2005, Filipinos may have to expect to have more taxes imposed on them, a party-list representative told Bulatlat in an interview. The government, said Bayan Muna (People First) Rep. Teddy Casiño, may impose additional taxes to raise the income needed to finance this year’s proposed national budget.

The House of Representatives has recently passed a proposed national budget of P1.053 trillion ($20,371,445,153 at $1:P51.69) for 2006 – which, Casiño also said, is the “largest budget proposal” in the country’s history. The budget bill is now up for deliberation at the Senate.

“A slower pace in economic growth, which is reflected by the slower GDP growth rate registered in 2005, meant lesser income to tax, hence lower revenue performance,” Casiño pointed out. “This means we may not have enough revenues to finance this budget proposal. This could mean more taxes in 2006.”

The government targeted P968.6 billion ($18,738,634,165) in revenues to finance the proposed 2006 budget. Based on data from the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines), total revenue collections for 2005 amounted to only P795.7 billion ($15,393,693,170), P172.9 billion ($3,344,940,994) less than the target.

Citing findings of the House Committee on Appropriations, Casiño said that every one-percentage point shortfall from the GDP growth forecast would result in a P6.2-billion ($119,945,830) deficit. BSP data shows that the Philippines registered a 5.1-percent GDP growth for 2005 – which is less than the low-end forecast of 5.3 percent based on the Medium-Term Philippine Development Plan (MTPDP) for 2004-2010.

The government failed to meet its targeted revenue performance for 2005 despite the imposition of the so-called “sin taxes” and the Restructured Value-Added Tax (RVAT), which government spokespersons say were imposed precisely to generate needed additional income.

The imposition of the “sin taxes” and the RVAT in 2005 had contributed to the widening gap between the cost of living and the income of wage-earners in the country. Based on data from the National Wages and Productivity Commission (NWPC), the national average family living wage for a six-member family – the average Filipino family – is P657.13 ($12.85) as of February 2006. Conversely, the daily minimum wage is presently pegged at a national average of P237.56 ($4.64) as of March 2006, with the highest being that in the National Capital Region (NCR) which stands at P325 ($6.35), NWPC data further show.

“The ‘sin taxes’ and the RVAT are not generating as much income as planned,” Casiño said.

Because of this, Casiño said, the government may be expected to impose more taxes this year.

That is, he said, unless it considers other ways of addressing the budget deficit. Casiño reiterated, as an alternative to more taxes, Bayan Muna’s long-standing call for the repudiation of behest loans.

But there’s more bad news. Most of the proposed budget for 2006 – which the Filipino people may have to finance with additional taxes – will go to debt servicing. Social services are at the lowest rung of priorities – as has always been the case.

In the proposed 2006 budget, the portion allotted for debt servicing amounts to P340 billion ($6,577,674,598), or 32 percent of the pie.

Education comes at far second, receiving P146.45 billion ($2,833,236,602) or 14 percent.

Government statistics show that the value of the education budget relative to the peso’s purchasing power has been declining steadily since 2000. Likewise, while the education budget appears to have been increasing nominally since 2000, its rate of increase has been lower than the country’s population growth rate.

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