 |
|
Dreaming
of a Balanced Budget We are in the midst of a nightmare induced by leaders who were more concerned about popularity and political points rather than sound economic policies. These same leaders are now making us believe that after this nightmarish fiscal crisis is the sweet dream of a balanced budget. Recall that during the time of Estrada, the original schedule was to balance the budget by 2004. Then came EDSA "Dos" and the need to placate the populace after the assumption of power. These resulted into staggering deficits in 2002 and 2003. At that time, the objective to balance the budget was the least concern of the new government and economic leaders. Last year, the Development Budget Coordinating Committee (DBCC) tried to bring back in focus the need to balance the budget. They came up with a new timeframe up to 2009. Of late, though, it looks like the massive assault caused by a series of cataclysmic fiscal realities is making it an elusive dream. Napocor burden. The big imponderable in this struggle to reduce the deficit and eventually balance the budget is the P500- billion obligation of the National Power Corp. Based on reported estimates, the government will need at least P60 billion each year just to pay the maturing obligations of Napocor. To start easing the burden of financing Napocor’s debt Mrs. Arroyo’s government has given the signal to increase Napocor rates. The recently announced intention to increase rates by 98 centavos per kilowatthour is just the first blow. Expect two to three more punches within the next three to eight months.Well, this is the price we all now have to pay for enjoying the generous and widely acclaimed move made by Mrs. Arroyo when she imposed a cap on the Purchased Power Adjustment (PPA) as she was preparing for the May 2004 elections. OTHER TARGETS. There are other targets as the Arroyo government searches for sources of funds to reduce the deficit and achieved a balanced budget. For instance, the scrapping of the pork barrel fund of both the executive and legislators will produce annual savings of more than P5 billion. But haggling is still going on among vested interests. Another big source is the withholding of the Internal Revenue Allotment (IRA) given to local government units amounting to about 40 percent of the taxes that the state collects. This would mean that the National Government is effectively subjecting to "garnishment" the funds due LGUs to pay the National Government’s debts. The irony of it is that while the National Government had slipped into a deficit since 1998 and this fiscal gap had grown to P200 billion last year, the LGUs as a group, have remained in surplus. EVERYTHING HAS A PRICE. Balancing the budget by 2009 or further is looking quite an impossible dream, and the road to achieving it strewn with the meanest landmines. Many view the recent alarm raised and the debates about the country being in the throes of a fiscal crisis as intended to bully all targeted sectors into accepting the package of bitter pills intended to raise the much-needed money. This is just like telling the children at the dinner table that daddy is not earning enough to support the needs of the family, so would everyone please take a cut in allowances and tighten their belts. Aside from targeting the IRA and the pork barrel (which many believe should have been done earlier), Mrs. Arroyo raised a fiscal howler to solicit public support and rally lawmakers to pass P80-billion worth of tax measures including the indexation of beer and tobacco excise taxes, a similar indexation of fuel taxes, additional impost on the telecom sector (tax on texting?), an increase in the value-added tax (VAT), among others. After the series of Napocor electricity rate hikes, we have to brace ourselves for the debilitating blows of the P80 billion in new taxes that the Arroyo government is ramming through the legislative mill. The new taxes, especially those that would affect the common people, would be the bitterest pills for a population that has not had any good news for a long, long time. There is important lesson somewhere here. I hope the public is realizing that there is no such thing as "free lunch." Sooner or later, we all have to pay for the goodies that our political leaders throw at us as they woo for our votes. ‘Breaking Barriers’ With Pagcor president Rafael Francisco "Breaking Barriers" on IBC-TV13 (11 p.m. every Wednesday) will feature Philippine Gaming Corp. (Pagcor) president Rafael "Butch" Francisco on Wednesday, 29th September 2004. What does Pagcor contribute to the Philippine economy and to society in general? Is it the cause for the proliferation of gambling or gaming in the country? Is Pagcor a scourge or a blessing? Pagcor earned approximately P20 billion last year, the bulk of which went to the government coffers and some amounts used to finance social amelioration programs and for athletes and sports development. The entertainment industry has been growing in many countries worldwide and the Philippines, despite its fragile economy, is no exception. Other countries like Singapore, Thailand and even Japan that were formerly not in favor of legalized gambling are finalizing plans to set up entertainment facilities that will include casinos. Legalized gaming is becoming an integral part of the lucrative tourism business. Opposition to Pagcor from some sectors has not waned despite Pagcor’s contribution to the economy and society in general. Proponents, however, say that without Pagcor, the significant amount it is earning would have gone to the pockets of gambling syndicates and other organized crime groups. For many church and civil society leaders and legislators, some of whom are masquerading as moral crusaders, Pagcor is the culprit for the receptive attitude of the youth towards gambling. However, if one looks deeply into the mode of gambling among students, transactions are via SMS or texting, a medium that is aggressively promoted by telecommunication companies, and the games being used are sports events such as basketball. It is clear therefore that whether Pagcor exists or not, these betting activities will occur. Those who are into gambling are there because of choice. The values they have acquired and developed made the choice easy. Rather than point to a scapegoat, the more positive approach is for the church, the schools, civic groups and, more importantly, the parents to pursue more vigorously value formation programs especially for children at elementary and high school levels. These would have to be long-term and sustainable programs, and not just one-off for media purposes. Unfortunately, value formation and attitude change are difficult challenges. More so in an environment where most parents are both earning a living and where social institutions like schools and even churches are pre-occupied with surviving in a fast-paced changing environment. As a result, the youth are left on their own finding ways to entertain themselves. Watch it. National Steel On TV "Isyung Kalakalan at Iba Pa" on IBC-TV 13 News (5 p.m., Monday to Friday) discusses today the attempt of Global Infrastructure Holdings Ltd., the new owner of the National Steel Corporation’s Iligan mills, to lobby for tariff barriers to discourage importation of cold rolled and galvanized coil. Moreover, it wants tariffs also imposed on hot rolled coils – a product that it does not even produce – and more importantly, on tinplates, from zero percent to a whopping 30 percent. Is the government being blackmailed to agree to the tariff protection with the threat that GIHL will not follow through with all its commitments? Watch it. 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 reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.
| |||
|