In his 2019 budget message to Congress, President Duterte mentioned two measures—the budget modernization bill or the measure strengthening Congress’s power of the purse by reiterating its power to appropriate and hold executive agencies accountable, especially in the light of the landmark decision of the Supreme Court outlawing pork barrel and the Aquino-era Disbursement Acceleration Program (DAP); and Package 2 of Comprehensive Tax Reform Package (CTRP).
“The budget modernization bill pending in Congress will promote and implement participatory budget mechanisms in the different phases of the budget cycle to entice citizen engagement and ensure a more responsive budget,” Duterte said.
The President is also pushing for the passage of the rice tariffication bill as the measure provides that revenues from rice tariffs shall be invested in public goods and services directly benefiting farmers through farm-to-market roads, irrigation and storage, which can reduce production and marketing costs.
“For one, I am asking the help of Congress to consider the passage, as soon as possible, of our rice tariffication bill, a priority legislation of this administration, which is estimated to reduce the price of rice by P3.40 per kilogram,” Duterte said.
“If implemented in the last quarter of this year, it could reduce headline inflation by about 0.20 percentage points, and an additional 0.60 percentage points in 2019. If implemented in the first quarter of 2019, headline inflation could decline by about 0.80 percentage points in full year 2019,” he added.
The bill aims to amend the Agricultural Tariffication Act of 1996, which allows the NFA to monopolize rice importation. The House Bill 7735, or the “Revised Agricultural Tariffication Act,” is up for plenary debates in the House of Representatives.
The budget modernization bill was filed in both chambers of Congress. HB 5590 was approved in March 2018 by the lower chamber. The Senate bill is pending.
The Department of Budget and Manage-ment is pushing for the passage of the bill, a measure that seeks to modernize budgetary practices in the Philippines. It is an encompassing reform initiative covering the entire budget process—from budget planning, to budget execution, tracking and so forth.
The DBM said bill will change the way the government does budgeting as it will address age-old problems like under spending and the usurpation of Congress’s power of the purse.
Among the pertinent features of the reform bill is the shift from a multiyear obligation budget to an annual cash-based budget. The common budgetary practice in the Philippines is to allow appropriations and obligations until the next fiscal year, extending the validity of funds to two years.
Push for CTRP
Also, President Duterte once again urged Congress to pass the second package of the CTRP.
“We urge Congress to study and thereby appreciate the merits of the other upcoming packages under the CTRP and to see beyond politics. The CTRP is not a populist reform measure,” he said.
“It seeks not to deprive people of resources, but instead to give them more through lower income taxes. And it seeks not to destroy business confidence, but instead to build the appropriate environment to attract more investments through quality infrastructure development nationwide and lower corporate income tax,” Duterte added.
Package 2 plus of the CTRP covers the lowering of the corporate income tax rate from the current 30 percent to 25 percent, and rationalization of fiscal incentives. Duterte said the 25-percent corporate tax rate is a competitive rate within the Asean region.
“With an estimated P301.2 billion in annual foregone revenues in 2015 alone, the need to rationalize the existing 150 investment-related fiscal incentive laws has become a priority. Under this set up, we will need to identify activities worthy of our fiscal incentives, and ensure that there is a sunset provision in the grant thereof,” he added.
Package 2 of the CTRP is now under deliberation by the House Committee on Ways and Means.
Meanwhile, he thanked members of the House and the Senate for their thorough study and passage of the Tax Reform for Acceleration and Inclusion (TRAIN) law that took effect on January 1, and through which the government will have the resources to achieve the goals of sustainable and inclusive growth that have eluded the people for years.
“For fiscal year 2019, we submit for your perusal and approval, a national budget that will amplify the forces and resources to effectively and efficiently build our nation, in order to draw more of our people from the clutches of poverty and maintain law and order, so everybody lives in peaceful coexistence,” said the President.
“We are almost midway to the path that our people have chosen to traverse with us, one that will take them from mere hopes and dreams of the past to the reality of a better and more comfortable life, in a peaceful and more progressive nation today. We are finally poised on the bridge that will lead us to the bright future that we can actually already glimpse,” said the President.
He said the shift to annual cash-based appropriations from the current obligation-based appropriations will promote better-designed, better-coordinated projects and programs from agencies, and speed up delivery of goods and services to the people, while obligations or contracts for programs, activities and projects (PAP) for implementation during the fiscal year should be delivered, inspected and accepted by the end of the said fiscal year.
Among the key budget priorities the President identified are: 1) intensifying infrastructure development through infrastructure projects in and outside Metro Manila and in local government units (LGUs), and through information-technology (IT) infrastructure; 2) expanding programs on human development; 3) enhancing social services through expanded educational opportunities, universal health for all, and social protection; 4) continuing provisions for the people’s basic needs by ensuring food security and securing meaningful employment; 5) rehabilitating Marawi and moving forward; and 6) building a more secure nation through hiring of more police officers and enhancing the capability of the Philippine National Police and the Armed Forces of the Philippines, and ensuring efficient administration of justice.
Budget hearings begin
Meanwhile, the House Committee on Appropriations will start to scrutinize today (Tuesday) the proposed P3.757-trillion national budget for 2019, themed “Building a Bright Future for the Philippines and Its People.”
The committee has calendared hearings on the budget proposals of government agencies and departments from July 31 to August 29. A briefing by the Development Budget Coordination Committee, the interagency body that determines the overall economic targets, expenditure levels and sources of funds, will kick off Tuesday’s hearing.
The agencies tabled for the last day of budget hearings on August 29 are the Office of the President, Office of the Vice President and the Department of National Defense.
Under the proposed 2019 General Appropriations Act, education will remain a top priority of the Duterte administration with P659.3 billion, higher by P72.2 billion or 12.3 percent than its cash-based equivalent in the 2018 budget.
Other agencies with big allocations are the Department of Public Works and Highways with P555.7 billion; the Department of the Interior and Local Government with P225.6 billion; the Department of National Defense with P183.4 billion; the Department of Social Welfare and Development with P173.3 billion; the Department of Health with P141.4 billion; the Department of Transportation with P76.1 billion; the Department of Agriculture with P49.8 billion; the Judiciary with P37.3 billion; and the Autonomous Region in
Muslim Mindanao with P32.3 billion.