The government has allocated P41.4 billion to finance the additional unconditional cash transfers (UCT) to the poorest 50 percent of the population for six months to cushion the impact of rising oil prices, Finance Secretary Carlos G. Dominguez III revealed on Tuesday.
The Department of Finance (DOF) chief said a portion of the funds needed for the cash aid would be sourced from the P15 billion to P17 billion advance payments for the purchase of tax stamps of cigarette companies.
“They don’t ‘give’ it to us. They just bought in advance over and above their average,” he told reporters on the sidelines of the Philippine Economic Briefing and Sulong Pilipinas 2022 at the Philippine International Convention Center in Pasay City.
Dominguez earlier said they are eyeing to also source the funds needed for the subsidy from excess dividends from government-owned and -controlled corporations (GOCCs) and the windfall from higher value-added tax (VAT) collections on fuel brought by higher oil prices amid the Russia-Ukraine war.
The economic team earlier proposed to release P33.1 billion needed to cover an additional UCT of P200 per month or P2,400 for one year for each household. However, President Duterte ordered Dominguez to raise the additional monthly additional UCT aid from P200 to P500 after drawing criticisms that the cash is “too small.”
Duterte also said Dominguez expressed reservations over the additional budget allocation needed to implement the increase in UCT benefits, since it will cause “problems” in the government finances after it is implemented.
Pressed on why the government is now planning for an additional UCT that will be good for six months instead of one year under their original proposal to the President, Dominguez said: “I am only telling you how much is available.”
Last month, Department of Budget and Management (DBM) Officer in Charge Tina Canda said that what the government can afford at that time was to provide P1,500 worth of UCT that will cover three months and that they are eyeing to release the amount this month.
Sought separately by the BusinessMirror on when the government will start releasing the additional UCT, DBM Undersecretary Rolando Toledo said they have yet to receive the certification of excess funds from the Bureau of the Treasury.
The DOF made the proposal to release an additional UCT as it fended off calls to suspend excise tax and VAT on fuel, arguing that suspension of fuel excise taxes would lead to a revenue loss this year of P105.9 billion and a higher debt-to-GDP and deficit-to-GDP ratios for the national government.
If the fuel excise taxes under Tax Reform for Acceleration and Inclusion (Train) law are suspended, the DOF said the deficit-to-GDP ratio this year will widen to 8.2 percent from the government’s projection of 7.7 percent. The budget deficit, which is the difference between revenues and expenditures, represents the amount the government needs to cover with additional borrowings.
Increased borrowings, in turn, will push up the debt-to-GDP ratio this year from a projected 60.9 percent to 61.4 percent.