MANILA, August 6 , 2004 (STAR) BIZLINKS By Rey Gamboa - Sen. Ralph Recto is proposing to first look at alternative sources of revenues for the National Governmentís budget predicament rather than immediately enact on the eight new tax measures being pushed by the President.

Recto says that people donít want to be burdened with more taxes, especially when there is so much talk about inefficiency and corruption. I agree with him when he says that our countrymen should not pay any more taxes when only part of it goes to the national coffers, and the budget deficit is so mismanaged.

Interestingly, the good senator uses what he calls as "gripo" economics to illustrate the deficit problem. If the water pipe network is the countryís tax system, and water is tax money, he says that any leak in the water pipes will only get bigger if more water is forced into it.

Logically, therefore, he concludes, plug the leaks first, and only when necessary should more water be pumped into the system. I concur when he says that taxes should be the last resort especially if these new tax proposals are indirect taxes that will hit the ordinary consumer.

Look At Alternatives First

What are the other alternatives? Here are excerpts of what Recto is saying: ĎFirst letís take a look at BIRís administrative efficiency in collecting taxes. Like we say, letís plug the leaks. Are there existing laws that need to be clarified? Are there any existing laws that are ambiguous that are making it difficult for the BIR to collect?

"Second, what about non-performing assets or other assets of government that we can privatize or sell, such as the government shares in San Miguel Corp. If Iím not mistaken, the value of our shares in SMC is something like P40 billion. We (also) have shares in Meralco.

"Third, we can reduce expenditures of government, take for example, redundant offices. I think the President is in the right direction when she said she intends to abolish 110 offices under the Office of the President.

"Itís quite funny that we have three agencies in effect to handle the pension fund of our workers. Why do we have GSIS, SSS and RSBS doing the same thing? Pareho lang naman ang trabaho ng mga agencies na ito, bakit tatlo-tatlo iyan? Di ba pwedeng i-merge na lang sa isa yan?

"If you reduce the bureaucracy by 10 percent, you save P40 billion this year. We (also) reduce the payroll every year. So ang laki ng long-term savings diyan.

"Plus you can sell so (many) government assets. Just here in the Senate, you can see PEA right beside us. You see all these lands available. Why canít we utilize them? Why should the solution be immediately taxing the public? Why canít we sell some of these lands? That way, youíre promoting investment. You need to get investments. By taxing the public, how will that create investments and jobs?

"We can also sell 49 percent of Pagcor and raise P100 billion kasi Pagcorís earnings is roughly P20 billion. You sell 49 percent and retain 51 percent, (and) you generate P98 billion. That way, youíre inviting investments.

"All Iím saying is that why should the first recourse be taxing the public."

One-Fund Principle

It seems that the pressure to solve the deficit problem is not confined only to generating new tax measures.

The Department of Finance now wants all travel tax income to go directly to the Bureau of Treasury in line with a "one-fund principle" that will supposedly put government in a better position to efficiently allocate financial resources in the face of worsening deficit position.

The finance department is asking Congress to remove the automatic allotments of the Commission on Higher Education (CHED), the Philippine Tourism Authority (PTA), the National Commission on Culture and Arts (NCCA) and the National Parks Development Committee (NPDC) that are being drawn from travel tax revenues.

At present, the CHED gets an automatic 40 percent share, the PTA receives 27 percent, NCCA is allocated 10 percent, and the NPDC gets a fixed P2.5 million per annum. The remainder goes to the National Treasury. Government collects a total of about P1.6 billion in travel tax revenues each year from all passengers of international flights leaving the country.

More Irate Taxpayers

All these aggressive moves on taxes should be carefully weighed or we may see a rise in public defiance. Case in point is this readerís reaction to the plan by the Ninoy Aquino International Airport management to collect an additional $5 (approximately P280) per passenger traveling overseas to pay for the increased cost of security.

"They should have anticipated the need to increase security and they should have long-term planning. We should not carry their burdens. They should resolve this by not involving passengers, especially OFWs," writes Louie Exclamador who is based in Saudi Arabia.

Need I say more?

An Update Of GSIS Issues On TV

ĎIsyung Kalakalan at Iba Paí on IBC-TV13 News (5 p.m., Monday to Friday) ends today the discussion of issues being confronted by Government Service Insurance System as it implements plans to restore its financial equilibrium. Like the Social Security System, its counterpart for the private sector, benefit payments have been outpacing membership contributions. Watch it.

ĎBreaking Barriersí With DOF Secretary J. D. Amatong ĎBreaking Barriersí on IBC-TV13 (11 p.m. every Wednesday) will feature Secretary Juanita Dy Amatong of Department of Finance (DOF) on Wednesday, 11th August 2004.

Do we really need new tax measures to provide funds for the ambitious program of President Arroyo? Or will an improved tax collection effort be sufficient to raise the needed funds? What is being done to curb government spending? What about the substantial tax leakages that were identified?

Join us break barriers and gain insights into the views of Finance Secretary Juanita Dy Amatong on various issues confronting the government as it tries to solve the very serious deficit problem and, at the same time, raise funds to support the Presidentís programs.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at If you wish to view the previous columns, you may visit my website at

Reported by: Sol Jose Vanzi

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