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THE
House of Representatives led by Speaker Jose de Venecia
Jr. approved late last week what was called a balanced
budget.
To
achieve a balanced budget, expenditures and earnings
must be even, even if budgetary allocations do not
appear even.
As if it
is not difficult enough to forecast tax collections,
second-guessing how the Senate will chop down the House
version is also as worrisome.
Another
consideration is the peso-dollar exchange rate which is
sometimes—even often, actually—politically and
economically motivated.
While it
is true that the US dollar appears weak as of now
against the Philippine peso and almost all other foreign
currencies, there is no guarantee the trend will not
reverse itself.
Who
knows, maybe it was the
United States’
intention to weaken its own dollar so that its imports
will not be as expensive as they were before.
The
complaint of the export sector that the strong peso has
instead weakened its capacity to earn more from abroad
is a strong case against proponents of a balanced
budget.
They
know it will never happen unless the revenues are based
on year-ago collections, not on future taxes that
usually do not materialize as expected.
Look at
the supposed-to-be sin taxes. Many years ago Congress,
as proposed by the International Monetary Fund (IMF),
approved the Comprehensive Tax-Reform Program (CTRP) in
the conflicting hopes (like having your cake and eat it,
too) that people would stop smoking and drinking due to
higher taxes and still accumulate tax revenues for the
government from the smokers and the drinkers.
The CTRP
was a disaster, to say the least. Then they tried the
value-added tax imposition, which was not working so
well that the VAT had to be expanded to E-VAT and
reformed later to become the R-Vat or whatever.
It
seemed during that time we had an oversupply of economic
geniuses who had made the poor poorer and the legitimate
rich less rich.
Less
rich like the exporters who now earn only P44 or so for
every dollar-export they make, and poorer like the poor
dollar recipients of relatives of overseas Filipino
workers who have to suffer the same fate.
Decades
ago Japan protested against the weak-US-dollar strategy
which the Japanese considered as blatantly deliberate.
The idea was to make the US dollar so weak that Japanese
products would become more expensive in the eyes of
their foreign consumers.
That’s
the same problem confronting
Europe with its strong common currency.
For now,
the budget as crafted in the House of Representatives
and the Department of Budget and Management may appear
balanced, but the moment the dollar becomes more
expensive, our foreign loans will likewise become more
difficult to service or handle.
There is
also a balance problem that will be in the offing—the
balancing of the local budgets of the congressional,
provincial, city and municipal head executives.
It’s
going to be a big headache for the executive department,
meaning the Palace, because political considerations may
have to be carefully balanced between the close and
not-so-close allies of the Palace.
As for
the opposition, that’s what they get for being in the
opposition.
To recap
what the House did last Friday, it approved the proposed
P1.227-trillion General Appropriations Act for 2008.
Next
year, or so it hopes, the government expects some
P1.236-trillion revenues, P1.108 trillion or 89.5
percent of which will come from taxes to be generated by
the Bureau of Internal Revenue (P845 billion) and the
Bureau of Customs (P254.5 billion).
The
remaining P127.34 billion will be sourced from nontax
revenues such as fees and charges (P40.5 billion),
Bureau of Treasury income (P57.28 billion), and proceeds
from privatization (P29.56 billion).
The
budget next year, it says, is premised on a real gross
national product (GNP) growth rate of 6.3 percent to 7.1
percent, an inflation rate of 3.0 percent to 4.0
percent, and a foreign exchange rate of P46 to P48 to a
US dollar.
How real
can they be?
E-mail: raulbvalino@yahoo.com.ph |
