Initiate reforms in making budget, Joker tells Noy

MANILA, Philippines - Former Budget secretary Benjamin Diokno has urged president-elect Benigno Aquino III to initiate reforms in the budget-making process and taxation.

He said Aquino should not allow senators and congressmen to divide the budget among themselves before approving it and sending it to Malacañang.

“At present, the national budget is divided between Malacañang, on one hand, and among members of Congress, on the other,” he told a Quezon City news forum recently.

He said President Arroyo has allowed this practice to be perpetrated by her allies in Congress.

The allocations for senators and congressmen are in the form of pork barrel funds and budgetary insertions, he added.

Diokno, who was former President Joseph Estrada’s budget secretary, pointed out that because of such insertions, billions in taxpayers’ money are spent for projects that have no significant impact on the public and the economy.

For instance, he revealed that there are big airport construction projects in provinces where the population is small and whose tourism potential is not great compared to other areas that need airports or where existing airports require expansion.

There is also a big multibillion-peso road project that aims to connect Aurora province to the Clark Freeport in Pampanga, he said.

“The first phase of the road alone costs about P800 million. It will benefit fewer people than if it were a high-impact project,” he said.

Aurora is the home province of Sen. Edgardo Angara, who chairs the Senate finance committee and author of a law that created the Aurora Special Economic Zone, a freeport area like Clark and Subic.

In her 2010 budget proposal, Mrs. Arroyo proposed a budget of P150 million for the freeport in Aurora, but Angara, as finance committee chairman, increased it by P650 million to P800 million.

Diokno said while the congressional pork barrel supposedly dispenses only P70 million for each House member and P200 million for each senator, leaders of the two chambers get billions in extra allocations.

He said that in the 2010 budget key members of the Senate and the House divided among themselves the P65 billion in additional pork barrel funds taken from the debt service allocation.

In signing the budget for this year, Mrs. Arroyo restored her proposed level of debt payments but kept the lawmakers’ projects supposed to be funded out of the P65-billion debt cut.

In the same Quezon City news forum, former senator Francisco Tatad revealed that one senator has cornered for himself at least P7 billion in pork barrel funds, most of which are allegedly hidden in agriculture-related projects.

Diokno said that regarding tax reforms, Aquino should consider reducing income taxes by at least 10 percent, from 30-32 percent to 20 percent, but at the same time increasing the 12-percent value added tax (VAT) to 15 percent.

There will be a net gain for taxpayers and the consuming public since the income tax reduction would be a lot bigger than the VAT increase, he said.

He said those opposing his proposal do not perhaps realize the effective gain it would achieve for taxpayers.