DOF flags fiscal loopholes in bills creating sole OFW agency

MANILA, Philippines — Bills seeking to create a Department of Overseas Filipino Workers have "policy and impelementation issues" that, if passed into law, could create funding problems for the proposed agency and the entire government, the Department of Finance said.

Commenting on the current form of the measures pending in Congress, Finance Secretary Carlos Dominguez III told Sen. Joel Villanueva, chair of the Senate labor committee, in a four-page letter dated June 24 that the new legislation has problematic fiscal provisions that would make allocating funds for the department very difficult.

The House of Representatives last March approved its own version of the OFW department bill. In the Senate, at least three bills are still pending in the committee level. The measure was among the promises of then candidate Rodrigo Duterte during his campaign for presidency in 2016.

Under the proposed legislation, an "assistance fund" amounting to between P1 and P5 billion must be earmarked to help distressed migrant workers and workers returning home for good.

The measures would also require using the proceeds from documentary stamp tax (DST) to augment the proposed department's annual budget. For the initial operation of the planned agency, funds will be sourced from the current year's outlay while subsequent funding requirements will be included in the budget.

But according to the finance department, fiscal planners "cannot support" the proposed creation of special funds for distressed OFWs "without the requisite provisions identifying specific source of funds outside of the General Fund."

"This will contradict the cash management principles of the national government, as well as the one-fund concept for government funds," Dominguez said in the letter, a copy of which was obtained by Philstar.com.

The "one-fund" concept is a fiscal management policy requiring that as much as possible, all revenues and other receipts of the government must enter the General Fund and their utilization and disbursement subject to the budgeting process. 

In the same letter to Villanueva, the finance chief also stressed that any additional budget for the new department will be "subject to available fiscal space and allocation in line with the approved budget law."

On the proposal to use DST revenues to fund the department, Dominguez said this "will not be an efficient fund source" since money sent home by OFWs are exempt from DST. "OFW beneficiaries shall be free from imposition of DST, in which case, no funds can be earmarked," he said. 

Lastly, Dominguez "raised concern" on the bills' proposal to abolish the Overseas Workers Welfare Administration (OWWA) and the Philippine Overseas Employment Administration (POEA), saying it is uncertain how the new OFW department will perform the functions of the two agencies.

"OWWA has fiduciary responsibilities and it is unclear on how these responsibilities will be transferred and managed in the proposed OFW department," he explained. "This is similar to POEA, which exercises regulatory powers over recruitment agencies."