LINE agencies failed to use billions of pesos of their budgets, making it difficult to justify the national government’s plan to borrow additional funds, according to Sen. Panfilo M. Lacson.
Lacson, vice chairman of the Senate finance committee, lamented that with the amount lost to tax leakages, as well as low disbursement rates of major infrastructure agencies, the Philippines may no longer need to borrow additional funds.
He cited data from the Commission on Audit (COA) that agencies, including the Department of Public Works and Highways, Department of Education and the Department of Transportation, have also failed to use P257 billion of their collective appropriations.
“Here we are borrowing more than what we need because we want to build up cash but, every year, we could not use large portions of the budget so it doesn’t make sense. We borrow to use, not to build up the cash position,” Lacson said during the budget hearing at the Senate on Tuesday.
Sen. Juan Edgardo M. Angara, chairman of the Senate finance committee, and sponsor of the budgets of the National Economic and Development Authority (Neda) and the Department of Finance (DOF), said his panel is cognizant of the low disbursement rates and tax leakages.
Angara said underspending is a “perennial” problem that should be addressed through internal changes. He proposed the reallocation of funds to other agencies that need more money.
He said allocating more funds to the free tertiary education and the Philippine Health Insurance Corp. could improve government’s spending as the state will invest more in Filipinos.
“It’s a perennial problem, underspending. Perhaps, the appetite for spending has grown faster than the capacity to spend,” Angara said.
Instead of borrowing, Lacson said the national government could gain additional funds by plugging leakages to improve tax collection efficiency.
Lacson said the government lost around P161.52 billion in taxes not collected from various imports.
If these tax leakages are plugged, Lacson said the government may no longer have to implement tax reforms to increase revenues.
Citing COA data, Lacson said tax leakages from Chinese imports in 2017 reached P82.18 billion; imports from Korea, P10.73 billion; Hong Kong, P4.56 billion; and the United States, P853.02 million.
Based on their estimates, Lacson said leakages from fuel imports that arrive in economic zones reached P63 billion in 2017.
“According to the secretary of Finance, the agency is trying to do its best. He explained that the discrepancy may be caused by goods that are for transshipment,” said Angara during the plenary.
Image credits: Senate PRIB