Diokno to Congress: Pass other tax measures before asking for higher budget

August 29, 2018

Congress has to pass the remaining proposed tax measures first if it wants additional budget, Budget Secretary Benjamin Diokno said on Wednesday.

This, as the leadership of the House of Representatives and the executive branch have agreed for a "transitory cash-based system," an apparent move to fully address the impasse on the hearing for the proposed P3.757-trillion budget for next year.

In his regular weekly forum, Diokno said it would be possible to pass a supplemental budget for this year or next year if there are "clear" sources of fund.

"Supplemental budget is a possibility but not a certainty. It's difficult to pass or initiate and pass a supplemental budget. The supplemental budget requires that the executive identifies the source of funding. So if Congress will agree to pass all of our tax measures, then there's a possibility," he explained.

He added there should also be "overwhelming justification" for asking a supplemental budget.

Four packages, plus the first Package-B of the Comprehensive Tax Reform Program, are pending in Congress.

The Duterte administration is hoping these proposed measures could be approved by Congress within the year to generate additional revenue.

Congress passed the controversial first phase of the CTRP - Tax Reform for Acceleration and Inclusion (TRAIN) Act - late last year and took effect last January.

However, TRAIN was being blamed for rising inflation in the past months. But government officials have insisted that TRAIN has minimal impact on inflation, saying major factors of higher prices were rising prices of oil and other external matters.

The House of Representatives, which earlier suspended the hearing on the proposed budget for next year, had been asking for a budget higher than the proposed P3.757 trillion by going back to obligation-based budgeting than the cash-based system the administration has been pushing.

The House appropriations committee, which halted the budget deliberations, complained of the "significant budget reduction" in the proposed 2019 National Expenditure Program under the cash-based system.

But Diokno explained that cuts in the proposed budget of some agencies was due to their low utilization, citing the case of the Basic Education Facilities of the Department of Education.

He said BEF, an annual line item of DepEd for its School Building Program, had an average of only 12.8 percent disbursement rate from 2015 to 2017.

Under the cash-based system, government agencies have been given only a shorter period to use the budget, otherwise, the fund would go back to the National Treasury. With the cash-based scheme, underspending and corruption could also be minimized.

Diokno said in his meeting with Nograles and House Majority Leader Rolando Andaya on Tuesday, they agreed there will be a "transitory cash-based program," which is "one year plus six months" for Personnel Services (PS), Miscellaneous and Other Operating Expenses (MOOE) and Capital Outlay (CO).

Under the earlier cash-based system, the budget should be used for one year and an extension of only three months.

Diokno refused to call as "compromise" the transitory cash-based program with the House in order for the budget hearings to resume.

Diokno said the extension to use the budget up to June next year was agreed upon because next year is an election year, thus, there could be delays on the disbursements because of the ban.

Earlier, Diokno admitted that lawmakers wanted a higher budget for next year because of the midterm elections.

"Maybe during election year, maybe I'm speculating, they want more projects in their districts. That's natural, right? If you're a congressman, you want to impress upon your constituents, so you need more projects," he had said, noting the observation before of some legislators the proposed budget for 2019 was "too tight." Celerina Monte/DMS