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Saturday, October 22, 2005
Bustamante: Like the sword of Damocles
By Bibs M. Bustamante
In Contemplation
AN entity, which is in great financial health is able to spend less than or equal to its earnings. If it has religiously made a budget -- which is a projection or schedule of spending and earnings -- every start of the period, then spending less during the entire period incurred for it a surplus, while spending more, a deficit. In neither situation, it is balanced.
The Philippines is not afraid of budget deficit. It has been already numbed operating in the red for so long a time. In 2004 the budget deficit of the Philippine government reached P187 B. It increased over time from as low as P16B about ten years ago. The Philippine officials do not worry a bit. They just have to tax Juan De La Cruz more to be able to post a surplus.
Our beloved Davao City has posted a budget surplus in 2004, or so they say. And to avert a possible budget deficit in the years to come, the city has to tax its inhabitants. A cute rhetoric, but must Davao citizens be afraid of deficit? And who could cause the deficit anyway? Could it be caused deliberately?
It can, by deliberately bloating the spending budget, or by the lackadaisical effort of collecting the earning due the city, the effect of which, the earning would become less than the budgeted spending. Another is deliberately not acting on the measures to increase taxes.
Dabawenyos must agree to be taxed additionally else budget deficit for the first time will be incurred. The looming deficit is now a big deal for the city. Anticipated will be the increasing cost of materials and fuels for the city's operations. By not being able to raise new taxes, the city will not be able to spend enough for basic services such as medicines and road maintenance for its constituents.
But for the man on the street, it is cold statistics that no longer affect him in anyway. He has long been an expert in deficit living anyhow. Taxing does affect him. Ganging up on him are the quadruple whammies of national taxation, domestic taxation, the rising cost of living, and his pay being at a stand still. And because of inflation, his pay even decreases, so to speak.
Deficit per se is not bad. But it will become one when the deficit continues or is sustained at an increasing pace. Are we experiencing a continuing deficit situation?
Borrowing money is the way to finance the budget deficit. They are inseparable partners that mean to sustain the operations of the city and to finance its projects it has to incur debt. A question is now asked; did not Davao City borrow in the past? If it did, then it was in deficit, and so deficit is not something to be worried about for the first time.
Not to agree on additional taxes, the Davaoeño on one hand will experience a looming deficit, which only the city officials and its economic managers must worry over. Agreeing to additional tax burden on the other hand means a Dabawenyo is about to bash his own head with a piece of rock.
No, it is not a case of "damned if you do, damned if you don`t."
(Mr. Bibiano M. Bustamante is a practising lawyer in Davao City -- bibsbust@yahoo.com)
For Bisaya stories from Davao. Click here. (October 22, 2005 issue)
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