President Arroyo yesterday vowed to carry out painful economic and bureaucratic reforms needed to put an end to the widening budget gap, avert a fiscal crisis and keep the country’s economic growth on track for the next six years.
The President has also asked the country’s leaders — including those in the private sector — "to find in themselves the moral resources" to help implement the government’s "financial strategy" to avert a fiscal crisis and sustain economic growth.
"I ask our leaders in government and the private sector to find in themselves the moral resources to set the example and take this fight to the finish," the President said.
"Our strategy is to avert a larger financial crisis down the road, sustain economic growth and protect the welfare of the most marginal sectors," she said.
In an official statement issued from the Palace, the President indicated strong support for a six-year fiscal rehabilitation and recovery strategy that calls for new taxes, power rate increases and spending cuts in government.
While the President did not refer to it by name, she alluded to the 30-page "Roadmap to Fiscal Rehabilitation" submitted and endorsed to her by Albay Rep. Joey Salceda, one of the members of her economic monitoring group.
"The world has taken attention of our efforts and we must wield the political will and determination to push through with our plans," the President said.
"This is a moment of sacrifice as it is a moment of truth, when we have to come to terms with the past and present and decide to win back national stability and survival over the long term," she added.
Salceda, an economics student of Mrs. Arroyo’s at the Ateneo de Manila University, has been raising the alert on a looming fiscal crisis caused by the country’s ballooning budget deficit. He is also the chairman of the House committee on economic affairs and is senior vice chairman of the appropriations committee.
According to Salceda, the fiscal rehabilitation plan consists of a P166-billion "pain package" covering new taxes, tariff hikes and spending cuts. The package proposed by Salceda also covers the generation of revenues: P30 billion from tax efficiency and P30 billion in interest savings from the National Power Corp. (Napocor), the single biggest source of the budget deficit.
But while the President may approve of the pain package, the Kalipunan ng Migranteng Pilipino at Pamilya (KMPP) said in a statement that this package is "a well contemplated plan of the Arroyo government to squeeze more earnings" from overseas Filipino workers.
KMPP secretary-general Devine Garcia slammed the proposed re-imposition of the gross income tax on OFWs, as stated recently by Finance Secretary Juanita Amatong, as a "narrow-minded" solution to the problem of the budget deficit.
"Targeting the OFWs and their families as the viable source of income seems to be the favorite pretense of the Arroyo government," she said.
"Congress should be very critical of this type of pronouncement because it’s a direct sign of anti-poor policy, using OFWs not only as a continuing milking cow, but as a slave to its labor export program," Garcia said.
She said the added burden of taxes on OFWs shoulders may cause Filipino migrant workers to extend their overseas work contracts and make their futures more insecure.
"By not creating a viable solution to the root cause of (worker) migration," she said, the government is allowing "families to continuously be torn apart."
Garcia said the government should bring back the Overseas Workers Welfare Administration’s services, which have been on the decline since the creation of the OWWA Omnibus Policies.
She also called on the government to stand up against the "continuing rights and welfare violations" suffered by OFWs and work to bring to justice persons victimizing migrant workers.
Bayan Muna party-list Rep. Joel Virador also hit the pain package proposed by Salceda, saying "the public would have to bear the excruciating measures brought by this prepaid plan because it fetches more taxes, higher cost of public utilities and consumer goods. This will actually pass most of the burden on ordinary people who are already in dire poverty."
"There is an urgent need for government to institute fundamental reforms, especially in the economy, if it seriously wants to address the crisis" without burdening the "ordinary folk," he said.
He raised the need for the following reforms: Re-channeling of the debt servicing allocation in the budget to basic social services like education, health and housing; drastic cuts in the intelligence and military budgets; protection of local investors and businesses by increasing the tariff rates for imported goods — except for oil and rice — and the removal or reduction of fiscal and tax incentives for foreign investors.
Virador also said the government must plug the holes in the government’s tax system by prosecuting big-time tax evaders. He also favors the abolition of the pork barrel and other sources of graft and corruption in government.
"Our people don’t have the money to pay additional taxes," he said. "They are already hard-put to make ends meet. Government’s insistence on (this) so-called burden-sharing is a folly because it is the common folk who shoulder the heavy burden."