`Pardo faces acid test in revenue collection'

Senate President Blas Ople said yesterday the confirmation of newly appointed Finance Secretary Jose Pardo depends on his revenue collection projections for this year.

Ople, chairman of the Commission on Appointments (CA), said Pardo must prove that the Department of Finance and the collection agencies under it can meet revenue targets to match the P100-billion deficit in the 2000 national budget.

"Revenue collection is the single biggest test for a finance secretary," the senator said.

The CA is also expected to grill the former trade secretary on the measures he plans to implement in ridding the Customs and internal revenue bureaus of graft and corruption.

"Secretary Pardo has to prove that he has the will to effect reforms in the finance department, which has been blamed for the shortfall in revenue collection last year," Ople said.

Former Finance Secretary Edgardo Espiritu had cited the culture of corruption in the government as among the major factors that prompted his resignation from the Cabinet last week.

Meanwhile, Rep. Michael Defensor (LP, Quezon City) said Pardo should find ways to raise revenues without pushing for the imposition of new taxes.

He criticized the newly appointed secretary for advocating a consumption tax on the rich.

"Improving tax collection is the answer, not imposing new taxes," Defensor said.

He also urged Pardo, a successful businessman before joining the government, to ask his friends in the business community not to cheat on their tax payments.

Defensor cited a study which showed that the top 1,000 corporations had a combined income of P149.7 billion in 1998.

"These companies should have paid P580 million in taxes but actually paid only P350 million," he said.

Rep. Prospero Pichay Jr. (Lakas, Surigao del Sur) noted that new taxes already took effect on Jan. 1, including the 10 percent value added tax on professionals, artists, athletes and broadcasters.

On the same day, an increase in the excise tax on alcohol and tobacco also took effect.

Pichay said the administration is planning to adjust administrative fees to raise an additional P5 billion a year.

"Clearly, we already have enough taxes. What is needed is an honest-to-goodness effort to collect them on time," he pointed out.

In a related development, Deputy Speaker Eduardo Gullas welcomed the appointment of new commissioners for the internal revenue and Customs bureaus.

"We really have to energize our tax collection agencies. Their lackluster performance contributed in a big way to the widening budget deficit and to the failure of the government to fund vital poverty alleviation programs," he said.

The Estrada administration has been successful in lowering the interest rates with the benchmark 91-day Treasury bill rate down from 14.9 percent at the start of President Estrada's term to 8.8 percent as of end-1999.

This marked reduction in interest rates provided the impetus for the economic growth as the low rates translated to bank lending rates of below 20 percent from the over 30 percent before the advent of the Estrada administration.

In a report, PNB Securities, Inc. said that the low rates for the second half of 1999 was bolstered by the issuance of low-denominated T-bills which allowed those with just P5,000 to invest in the T-bills.

Before the Bureau of Treasury of the Department of Finance sold the small-denominated T-bills to the public, only those with over P100,0000 can invest. But with the DOF's Small Investor Program, the poor were able to increase their income.

PNB Securities said that the development of the capital market was boosted by this innovative T-bill program with the stock market now readying trading for the T-bills.

The innovative financing package of the DOF resulted in interest savings of P6 for every P100 in loans contracted by the government. This is the difference between the 14.9 percent in T-bill rates before the Estrada administration started the prevailing 8.8 percent interest rate.

Consistent with the Estrada administration's fiscal measures, the Department of Finance has been able to get loans through the issuance of global bonds, the first-ever Euro bonds and other trail-blazing financing measures. For these innovative packages, the Philippines was cited by two prestigious publications, the Finance Asia and the International Finance Review.

The government was able to get about $2.75 billion from international capital market last year that provided the country new access to capital, such as the European market.

PNB Securities said that the availability of the foreign loans meant that no undue pressure was exerted on the local capital market that would have nudged the interest rates to go up. And this led to economic growth. --