DOF squeezing GOCCs to fund bigger cash aid

Finance Secretary Sonny Dominguez (File photo by JOAN BONDOC / Philippine Daily Inquirer)

Updated @ 4:24 a.m., March 23, 2022

MANILA, Philippines — The Department of Finance (DOF) will squeeze government-owned and -controlled corporations (GOCCs) to fund the bigger cash aid ordered by President Rodrigo Duterte for the poorest households.

Asked on Tuesday if borrowings could finance the planned bigger monthly cash aid — P500 instead of P200 — to mitigate the impact of steep oil prices on poor families, Finance Secretary Carlos Dominguez III said: “Foreign or domestic debt do not create fiscal space; only unbudgeted revenue and unspent revenues do.”

As such, Dominguez said, the additional funding required to disburse unconditional cash transfers “will initially come from the windfall VAT (value-added tax) collections and additional dividends from GOCCs.”

But urban poor groups are not impressed.

For Kalipunan ng Damayang Mahihirap (Kadamay), the proposed P500 cash aid is small change and will not meet the needs of impoverished families amid the surging costs of fuel and basic commodities.

“Even if the president raised that aid to P500, it’s still not enough,” Kadamay secretary general Eufemia Doringo said in an interview on Tuesday.

“We are not asking for pocket change that we can buy candy with. We are asking for aid that can help poor families survive in the middle of a crisis,” Doringo said.

Anakpawis national president Ariel Casilao, a former lawmaker, pointed out that the government managed to distribute P8,000 to each of some 11 million poor families under the Bayanihan to Heal as One Act.

“The government can find a way to give that kind of aid with the current funds it has—the savings, unused 2021 funds, the President’s special funds, and the President’s intelligence funds,” Casilao told the Inquirer in a separate message.

“We are hoping that with the remaining months of President Duterte, he won’t go cheap on Filipinos,” Casilao said.

At the onset of the COVID-19 pandemic in 2020, the government ordered GOCCs to remit their dividends in advance, a sizable portion of which was then given as cash aid to vulnerable households.

Under Republic Act No. 7656 or the GOCC Dividend Law, all state-run firms are mandated to declare and remit at least half of their yearly income to the national treasury as dividends.

The DOF, which oversees state-run firms, is backing a bill pending in Congress that will raise GOCCs’ mandatory dividends to at least 75 percent of their annual earnings, in an effort to collect additional revenues to service the ballooning foreign debt for the pandemic response.

Dominguez said last week that at an estimated average global oil price of $110 per barrel this year, the Bureau of Customs could collect an extra P26 billion in the 12-percent VAT, for distribution as targeted subsidies to vulnerable sectors.

He told the President that giving cash aid totaling P33.1 billion to the poorest families would be more economical than borrowing more money if excises on oil were to be suspended.

“We realize that this is not enough, but this is what we can afford as of this time… This is something that we can sustain,” Dominguez said earlier.

But Kadamay’s Doringo wondered why the poor and other ordinary Filipinos had to bear the brunt of the spike in the costs of fuel and, consequently, of basic goods, “when there are people like the Marcoses who have yet to pay huge taxes to the government.”

She was referring to the P203 billion in estate taxes for which the heirs of the dictator Ferdinand Marcos are liable, as recently confirmed by the Bureau of Internal Revenue.

Fuel subsidy

“That P203 billion, if you calculate it correctly, can provide P10,000 to each poor family. The government keeps saying it can’t afford to give more aid due to lack of funds or whatever. Why not go after that P203 billion?” Doringo said.

With the bigger P500 per month, or P6,000 in total aid, for the entire year as ordered by Duterte, the government will have to look for P70 billion to P80 billion in funds.

The additional aid is on top of the P6.1-billion fuel subsidy to public utility vehicle (PUV) drivers and fuel discounts to agricultural producers, which will also come from excess VAT collections from expensive oil.

The P3-billion first tranche of fuel subsidies (P2.5 billion) and discounts (P500 million) were released this month, as these had been set aside under the budgets of the Departments of Transportation and of Agriculture. The second tranche amounting to P3.1 billion will be released next month, once excess revenues are available, officials had said.

Dominguez had rejected calls to suspend the excise on oil products under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, saying it would cost the government P105.9 billion in foregone revenues this year.

The government had planned to collect a total of P147.1 billion in taxes from oil products in 2022—P15.8 billion in VAT at the previous baseline estimate of global oil costing $70 per barrel, plus P131.4 billion in fuel excise tax.

Dominguez had warned that reduced revenues would affect, among others, infrastructure projects under the “Build, Build, Build” program, as well as salaries of teachers and uniformed personnel.

He had said that removing oil excise taxes would put more pressure on the national government’s already strained fiscal state.

“The situation is compounded by the rise of interest rates globally. Higher borrowings now will further increase our interest payments and deficit in the future,” he had warned Mr. Duterte.

‘Public servants too’

One of the transport groups seeking a P15 minimum fare in PUVs on Tuesday snubbed the scheduled second hearing on their request, citing the earlier decision of the Land Transportation Franchising and Regulatory Board (LTFRB) denying a P1 provisional fare increase.

Orlando Marquez, president of the Liga ng Transportasyon at Operators ng Pilipinas (LTOP), strongly rebuked the LTFRB for declaring it would “not entertain” any more fare-hike petitions.

Marquez said that on Monday night, the LTFRB invited the LTOP and other transport groups to a Tuesday meeting with an unspecified agenda.

“We decided not to attend it,” Marquez said. “Since we were already annoyed after they said they won’t entertain any more fare hikes, we decided to boycott [the hearing].”

“We are public servants, too. We have a huge contribution to the economy of the Philippines. What we were just asking is an ounce of respect,” he said.

The other groups that lodged a separate petition for a P15 minimum fare are 1-Utak, Alliance of Transport Operators and Drivers Association of the Philippines, Alliance of Concerned Transport Organizations, and Pasang Masda.

Marquez said he would convene LTOP members to discuss their next course of action.

The LTFRB did not immediately respond to media requests for comment.

Only for fuel

Also on Tuesday, LTFRB Executive Director Maria Kristina Cassion issued a statement reminding transport workers to use the P6,500 fuel subsidy only for purchasing the needed diesel for their vehicles, as stipulated by the General Appropriations Act of 2022.

Cassion said the LTFRB “is still in the process of releasing the fuel subsidy to other beneficiaries.”

“We are coordinating with the Land Bank of the Philippines to expedite the implementation of the entire [subsidy] program,” she said.

RELATED STORY

Duterte orders P200 subsidy for poor raised to P500

PH must step up digital shift for better cash aid system – WB

KGA / ATM