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Thursday, August 24, 2006
RP finances improved: Teves
By Cherry T. Lim Of Sun.Star Cebu
The National Government has made headway in increasing revenues, reducing its budget deficit, and slowing down debt growth, but the Philippines is not out of the woods yet, the top financial executive of the land said.
“We need your help. We’re not yet out of the woods,” said Finance Secretary Margarito Teves yesterday.
Speaking at the 3rd Sun.Star Economic Forum held at Waterfront Cebu City Hotel and Casino, he said both the government and the private sector still need to work hard to attain the country’s revenue targets for the next two-and-a-half years so that the Philippines can meet its target of a balanced budget by 2008.
The Philippines is aiming for a budget deficit of P125 billion this year, representing 2.1 percent of gross domestic product (GDP), lower than last year’s budget deficit of P146.5 billion, representing 2.7 percent of GDP.
GDP refers to the amount of goods and services produced by a country.
So far, the country is on track to meet this year’s target. Teves said the budget deficit came to just P48.5 billion in the first seven months of this year after budget surpluses were recorded for the months of April to June.
The government is targeting to increase revenues this year by 19.5 percent.
RVAT
One of the measures the government is relying on to increase revenues is the Reformed Value-Added Tax (RVAT), passed last year to expand the scope of the goods and services subject to the value-added tax (VAT), and raise the VAT rate to 12 percent from 10 percent.
In regard to the RVAT, Teves said: “We are currently ahead of target by P7 billion as of June 2006.” VAT collections hit P38.22 billion during the first six months.
To further encourage Filipinos to pay the tax, he said President Arroyo had issued Administrative Order 141 mandating public reporting on the use of RVAT proceeds.
To stem the financial bleeding, the Department of Finance (DOF) is also working to improve financial discipline among government-owned and -controlled corporations (GOCCs), which are notorious for incurring losses; and to accelerate privatization.
Discipline for the GOCCs will start with the National Food Authority, where a grant from an Australian aid program hopes to maximize the NFA’s profit centers and minimize the losses of its cost centers.
Debt growth
Since the whole idea of increasing taxes and revenues is to give the government enough internally generated funds so that it no longer needs to borrow funds from abroad, Teves reported that debt growth was slowing.
The National Govern-ment’s outstanding debt was P3.9 trillion in 2005, representing 72.3 percent of GDP. In 2004, it was P3.8 trillion or 79 percent of GDP.
Teves said the government is now “lengthening its debt maturity profile and diversifying the borrowing mix in favor of local borrowing.”
Three measures now pending in Congress aim to improve the country’s financial shape further.
These are the bills on the rationalization of fiscal incentives and the simplification of the taxation of the self-employed. The fiscal responsibility bill seeks to impose limits on public debt and unfunded expenditures.
Asked whether he would support Sen. Ralph Recto’s Senate Bill 2411, which wants to do away with tax and duty exemptions for companies serving the domestic market, except those located in the country’s poorest 30 provinces, Teves said: “Yes, the DOF will support the broad directions of the bill, mainly minimizing support for domestic industries.”
But he said the DOF had not yet come up with a positive list of industries that it would want to still enjoy fiscal incentives.
Cases filed
To improve the collection of taxes, the finance chief said 62 cases had been filed with the Department of Justice under the Bureau of Internal Revenue’s (BIR) Run After Tax Evaders program. Sixteen cases have been filed under the Bureau of Customs’ Run After The Smugglers Program.
Modern technology at the ports and a fully automated import-export system are expected to reduce revenue leaks further.
To ensure that government officials themselves do not undermine the efforts of the national government to collect revenues, lifestyle checks among BIR and BOC personnel will continue.
Teves suggested that TV cameras deployed the way they are in the hugely popular Big Brother TV show might also be “good for checking irregularities.”
Asked to comment on Albay Rep. Joey Salceda’s remarks during a business forum in Mandaue City Tuesday that the country is awash with cash to the tune of P87 billion that government does not know what to do with, Teves said this didn’t mean that the funds could be channeled to businessmen who wanted to borrow money.
He explained that there is still a “mismatch between what lenders think and what the borrowers need.”
He also said the money could actually be used by the government’s operating agencies themselves, like the Department of Public Works and Highways and the Department of Agriculture, but internal rules and procedures related to bidding were hampering their use of the funds.
For Bisaya stories from Cebu. Click here. (August 24, 2006 issue)
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