Arroyo Has Her Own Share in the Fiscal Crisis

While much has been said about the current fiscal crisis, a great part of the discourse on this issue has been composed of calls for sacrifice on the part of the people so that government may be well equipped in facing this debacle.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

Much has been said about the fiscal crisis the country is currently facing. However, a great part of the discourse on this issue has been composed of calls for sacrifice by the people so that government may be well equipped in facing this debacle.

So far, no one in particular has been taken to task for the fiscal crisis.

As Paul Quintos, executive director of the Ecumenical Institute for Labor Education and Research (EILER), sees it, President Gloria Macapagal-Arroyo played a particular role in aggravating the fiscal crisis even as it is rooted in policies that were in place before she became president.

Quintos, who took an MSc in Development Studies from the London School of Economics and used to be a research associate at the Philippine Institute of Development Studies (PIDS), said the fiscal crisis has three primary aggravating factors stemming from the prevailing “backward, non-industrialized” economy: imperialist dictates, debt, and bureaucrat capitalism.

The “backward, non-industrialized” nature of the prevailing system, Quintos told Bulatlat in an interview over the weekend, “keeps the economy underdeveloped and always in deficit, whether that deficit is expressed in terms of trade deficit, lack of investible funds, and also in terms of government always lacking in budgetary resources – for basically, the government revenue collection is a function of the general level of productivity of the economy as a whole, and if the economy is perennially in deficit, so would be the government coffers.”

“Such a system is perpetuated by the dominance of imperialism, particularly U.S. monopoly capital in the Philippines,” Quintos adds.

Macapagal-Arroyo’s role in the fiscal crisis, according to Quintos, lies in her being the main representative of the ruling system and the ruling classes. To maintain herself in this position, “she has to implement the imperialist designs,” he says.

WTO proponent

Quintos notes that Macapagal-Arroyo was the main proponent of the country’s entry into the World Trade Organization (WTO) as a senator in 1994. The reduction of tariffs on imported goods, which is required by the WTO, also reduced the revenues that government is able to collect, he said. He explained that since the Philippines is an import-dependent economy, tariff reduction took a huge toll on government revenues.

Among the policies hewing to the WTO agenda is the granting of tax exemptions to multinational corporations. Finance Secretary Juanita Amatong recently revealed that the government gave P229.4 billion in tax incentives last year.

As regards the debt problem, Quintos says the Macapagal-Arroyo administration exacerbated it by continuing the “good debtor” policy, or the policy of “holding foreign debt as untouchable or a sacred cow.”

Debt servicing has always received the biggest budgetary allocations under the Macapagal-Arroyo administration. In fact, according to Rep. Eduardo Zialcita (Lakas-CMD, Parañaque City), every Filipino pays P0.40 ($0.0071 based on a $1:P56 exchange rate) for every peso of debt.

More than P200 billion

The government’s budget deficit for this year is estimated at P197.8 billion. If it had the political will, Zialcita said, resorting to debt repudiation and renegotiation the government can easily collect more than P200 billion.

Quintos says the government’s assumption of the debts of government-owned and -controlled corporations worsens the debt problem. He cites the cases of the National Power Corporation (NPC) and the Public Estates Authority. In particular, he said, the government has assumed the debts of the NPC to facilitate its privatization by encouraging investors to buy in.

Meanwhile, according to Quintos, Macapagal-Arroyo has both direct and indirect shares in corruption.

He noted that the president was reported last year to have been involved in a number of corruption cases. These cases were documented by the anti-corruption alliance Action Against Corruption and Tyranny Now (ACT Now).

Quintos also said that the Macapagal-Arroyo administration has used a soft approach to tax evasion.

“For example, I haven’t heard of any resolute pursuit of Lucio Tan and other tax evaders,” he noted. Tan, a Filipino-Chinese taipan and one of Asia’s richest businessmen, has P28 billion in unpaid taxes dating several administrations back. Urban poor leader Carmen Deunida and former Internal Revenue Commissioner Liwayway Vinzons-Chato are one in calling him the “country’s biggest tax evader.”

Aside from these, Quintos notes, Macapagal-Arroyo has used “plum appointments to GOCC (government-owned and –controlled corporations) positions as a way of rewarding her political supporters and financial backers, who then milk these positions to the detriment of public interest.”

He cites the case of Winston Garcia, general manager of the Government Service Insurance System (GSIS), who has been reported to be earning a salary of P540,000 a month while the average government employee is paid only P5,082 a month. “She got a lot of support from him (during the May 2004 elections),” he said.

Garcia is presently accused of filching funds from the GSIS. Bulatlat

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