DOF: Congress must pass ‘fiscal responsibility’ bill

The Congress by next year should pass into law a measure that will prohibit new spending not supported by revenue sources, a ranking official of the Department of Finance said Monday. Finance Assistant Secretary Teresa Habitan said the department is hoping that the “fiscal responsibility" bill would be a priority measure when the 15th Congress resumes session by Jan. 18, 2011. In his State of the Nation Address last July, President Benigno Aquino III committed to push for the bill, which aims to narrow the government’s widening budget deficit and free funds for social services such as public health and education. Habitan reiterated the department’s stance that approval of the measure is crucial in reducing the dent on state coffers as it would help ensure debt reduction and fiscal sustainability. “This is because in the fiscal responsibility measure, the spending component will always determine a funding source," she explained. With this, there would be no unexpected spending that could widen the government’s budget gap, Habitan said. The Aquino administration is crossing its fingers to contain the budget gap at P325 billion this year or 3.9 percent of gross domestic product. As of end-October, the deficit has widened to P270.3 billion or below its program of P292.8 billion. Previous administration’s beef with Congress The Arroyo administration had consistently blamed the 14th Congress for enacting some “revenue-eroding measures." Those measures include:

• the creation of special economic zones in Bataan, Ilocos Sur, Cebu, Davao, and Samar (revenue loss of P15 billion);
• the national government’s share from royalties from indigenous energy sources to effect a reduction in electricity rates (revenue loss of P14.9 billion);
• the re-imposition of the franchise tax on power distribution (revenue loss of P7.1 billion); and
• the exemption from income and other taxes granted to the Real Estate Investment Trust (revenue loss of P5.3 billion). — JE/MRT/VS, GMANews.TV