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MANILA, Philippines -- The Aquino administration will begin to feel the pinch of insufficient revenues as early as next year given its failure to legislate new tax measures, a University of the Philippines economics professor said.
On the sidelines of a Philippine Center for Economic Development-Institute of Public Economics and Regulations forum, Benjamin Diokno said the government already missed the boat in legislating new taxes as it has less than two years before the next elections. Politicians are reluctant to pass tax measures immediately before an election.
This would mean inadequate funds for the "K plus 12" scheme for education, universal healthcare, and the planned infrastructure buildup, Diokno said.
"I think the government is (giving) a false sense that we have fiscal space. It's not true that we have this fiscal space because we have not been spending our money and if you sum up all the things they want to do like K plus 12, universal healthcare, public infrastructure of about 5 percent of GDP, they're gonna run out of money maybe as early as 2013," the economist told reporters.
A measure of economic performance, gross domestic product is the amount of final goods and services produced in the country.
"They've got to change their tax system but he, the President, doesn't want to talk about that. Unfortunately, I think he has missed the opportunity for doing that," he said.
Diokno expects the government's fiscal conservatism to persist through 2016, citing the conservative bent of the President's economic managers, particularly Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad, and Socioeconomic Planning Secretary Cayetano W. Paderanga Jr.
Given this conservatism, budget deficits in the near term would be less a problem, Diokno said, adding that the fiscal gap would reach P250 billion this year, lower than last year's ceiling of P300 billion.
The economist expects the government's fiscal conservatism to result in slower delivery of social services.
"The way I see it, he (the President) won't be able to deliver on his other promises. Usually, when you're in a crunch, you sacrifice public infrastructure because there are no warm bodies, no government employees affected there but that will actually doom us to a lower growth path, if we don't make up for past neglect for infrastructure," Diokno said.
"Last year I said that only half of the P300 billion (will be spent), max. That's bad because consumers are not spending, private investors are not investing, you need the government to perk up the economy," he said.
Earlier, state-owned Philippine Institute of Development Studies (PIDS) warned the country won't have ample funds to meet the Millennium Development Goals (MDGs) by 2015 barring fresh tax measures this year.
Dr. Rosario G. Manasan, PIDS senior research fellow, said the window of opportunity was two years -- particularly 2011 and 2012, -- since legislating new tax measures on an election year, 2013, will result in "diluted" measures.
She said the government would need additional resources to meet the MDG of halving poverty by 2015. Poverty incidence stood at 26.5 percent in 2009.
