Unshared burden
Unshared burden
Posted 09:44pm (Mla time) Feb 23, 2005
Inquirer News Service
Editor's Note: Published on page A12 of the February 24, 2005 issue of the Philippine Daily Inquirer
BARELY three months after declaring that we were over the hump, President Macapagal-Arroyo has resurrected the specter of an Argentina-type economic meltdown. "The bottom line is, we need to raise P80 billion [through] legislative measures and P100 billion [through] administrative measures," she said during a visit to Bohol. "Otherwise, in two years' time we will be an Argentina."
That was, of course, the warning first issued by 11 professors from the UP School of Economics in August last year; a warning immediately picked up by the President herself. She then announced that the country was experiencing a fiscal crisis and quickly unwrapped a package of measures designed to increase revenues and cut government expenditures, with the ultimate goal of holding back a runaway deficit and arresting the growth of an already huge public debt. The people responded by muting their opposition to new taxes and, in some places in Mindanao, even chipping in some modest sums for a fund-raising drive organized by their bishop. Congress started discussing new tax measures, and some lawmakers offered to take cuts on, if not completely give up, their pork barrel allocations.
However, all the good will and good intentions evaporated as soon as it became clear that sacrifices had to be shared. It soon became clear that all the sacrifices would have to be borne exclusively by the citizens, from higher taxes to increased power rates.
After expressing shock over the high salaries and rich perks enjoyed by officials of a number of government-owned corporations, Malacañang seems to have forgotten that cutting expenditures can help reduce the deficit. When local government officials opposed a reduction in their internal revenue allocations, Malacañang also dropped the idea. After Congress passed two of the eight new tax measures proposed by Malacañang, some lawmakers promptly demanded the release of their pork barrel. It looked as if our lawmakers passed the new tax measures not to save the nation from bankruptcy and the resulting chaos but to preserve their pork barrel funds and their usual kickbacks.
The administration seemed to have lost sight of the real reason for its frenzied search for additional revenues. Like some congressmen who started licking their lips after smelling pork, Malacañang began talking about the many added services the government could provide as a result of the new revenue-generating measures. But then, didn't the President declare the crisis over some time in November, long before the government could collect a single centavo from the new taxes?
Malacañang and Congress were already counting the chickens--until the international credit ratings agencies, Moody's Investors Service especially, rudely reminded them that more than P5 trillion in public sector debt remained undiminished and the government's capacity to pay it remained in doubt. That reminder by itself, coming in the form of a two-notch downgrade in our sovereign debt rating, is going to cost us plenty, setting us back by $114 million in added interest costs yearly, according to some estimates.
That's nothing compared to what will happen if the government cannot put its financial house in order and very soon. For the President, it was time to re-issue the dire warning she made six months ago, if only to get Congress to act more quickly on the other revenue-generating measures, especially the increase in the value-added tax. But will the warning work this time? Will it make Congress work faster on the other tax measures, for instance? More importantly, will it make people understand and accept the need to bear a heavier burden in terms of more taxes and higher prices?
It's unlikely that people will rally behind the effort like they did last year. Not when Congress and Malacañang seem determined to dump all of the responsibility for paying off the country's debts on them.
Posted 09:44pm (Mla time) Feb 23, 2005
Inquirer News Service
Editor's Note: Published on page A12 of the February 24, 2005 issue of the Philippine Daily Inquirer
BARELY three months after declaring that we were over the hump, President Macapagal-Arroyo has resurrected the specter of an Argentina-type economic meltdown. "The bottom line is, we need to raise P80 billion [through] legislative measures and P100 billion [through] administrative measures," she said during a visit to Bohol. "Otherwise, in two years' time we will be an Argentina."
That was, of course, the warning first issued by 11 professors from the UP School of Economics in August last year; a warning immediately picked up by the President herself. She then announced that the country was experiencing a fiscal crisis and quickly unwrapped a package of measures designed to increase revenues and cut government expenditures, with the ultimate goal of holding back a runaway deficit and arresting the growth of an already huge public debt. The people responded by muting their opposition to new taxes and, in some places in Mindanao, even chipping in some modest sums for a fund-raising drive organized by their bishop. Congress started discussing new tax measures, and some lawmakers offered to take cuts on, if not completely give up, their pork barrel allocations.
However, all the good will and good intentions evaporated as soon as it became clear that sacrifices had to be shared. It soon became clear that all the sacrifices would have to be borne exclusively by the citizens, from higher taxes to increased power rates.
After expressing shock over the high salaries and rich perks enjoyed by officials of a number of government-owned corporations, Malacañang seems to have forgotten that cutting expenditures can help reduce the deficit. When local government officials opposed a reduction in their internal revenue allocations, Malacañang also dropped the idea. After Congress passed two of the eight new tax measures proposed by Malacañang, some lawmakers promptly demanded the release of their pork barrel. It looked as if our lawmakers passed the new tax measures not to save the nation from bankruptcy and the resulting chaos but to preserve their pork barrel funds and their usual kickbacks.
The administration seemed to have lost sight of the real reason for its frenzied search for additional revenues. Like some congressmen who started licking their lips after smelling pork, Malacañang began talking about the many added services the government could provide as a result of the new revenue-generating measures. But then, didn't the President declare the crisis over some time in November, long before the government could collect a single centavo from the new taxes?
Malacañang and Congress were already counting the chickens--until the international credit ratings agencies, Moody's Investors Service especially, rudely reminded them that more than P5 trillion in public sector debt remained undiminished and the government's capacity to pay it remained in doubt. That reminder by itself, coming in the form of a two-notch downgrade in our sovereign debt rating, is going to cost us plenty, setting us back by $114 million in added interest costs yearly, according to some estimates.
That's nothing compared to what will happen if the government cannot put its financial house in order and very soon. For the President, it was time to re-issue the dire warning she made six months ago, if only to get Congress to act more quickly on the other revenue-generating measures, especially the increase in the value-added tax. But will the warning work this time? Will it make Congress work faster on the other tax measures, for instance? More importantly, will it make people understand and accept the need to bear a heavier burden in terms of more taxes and higher prices?
It's unlikely that people will rally behind the effort like they did last year. Not when Congress and Malacañang seem determined to dump all of the responsibility for paying off the country's debts on them.
posted by Dante at 4:23 PM
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