Press Release
July 16, 2008

Loren cautions against gov't subsidies

Senator Loren Legarda yesterday reiterated her call on the government to practice prudence in spending, saying the quarterly collection from value added tax (VAT) windfall should be used for addressing other more pressing problems. Legarda made the call in reaction to President Arroyo's announcement Tuesday at the start of the National Disaster Coordinating Council Cabinet-level meeting that the government is readying to release another round of financial assistance for the poor amounting to P4 billion.

The amount will be drawn from the government's revenues from value added tax on oil from period April to June (second quarter). The same amount actually forms part of the P43 billion the government revenues from the expanded value added tax in the first five months. Out of the total VAT revenues, P9 million came from the oil price increases alone.

"The government has definitely lost prudence in spending. It still has to explain the COA reports on irregularities and now here's another round of subsidies which are in the nature of dole-out," said Legarda.

Earlier, Legarda had sought the explanation of Malacanang regarding the Commission on Audit's report that it had allegedly spent "scores of millions in travel expenses, maintenance costs and other miscellaneous expenses as opposed to the minute and to some extent zero disbursements in training, "textbook and instructional materials", "hazard pay" among others."

Legarda said subsidies are short-term in nature and are intended to cushion the affected sectors from the negative shocks brought by the economic slump which the country has been battling.

"What we are seeing now is a continuous bout of subsidies. It seems that the government is focusing its energies into employing piece-meal solutions until the economic troubles abate," Legarda said.

"It is like putting band-aid to stop the bleeding but not curing the wound," she added.

According to Legarda, the government should not enforce cost-effective mechanisms in spending the excess revenues it collected due to inflation. It requires a balancing act and political will to deny the temptation of using these subsidies to gain approval from a distraught public. "We have plenty of pressing problems needing full attention, but are often neglected like education. And subsidies should not comprise most of the government's plan for the people to surpass this distressing time. The predicament we are in should make us realize our mistakes in the past," she said.

"We should opt for subsidies that are not "dole-outs" in essence. Subsidies in education and health are more needed than ever considering that these are what people will most likely forego,' said Legarda.

Legarda cited a recent findings released by the National Statistics Coordination Board (NSCB) that the number of children not going to school is steadily increasing.

"This is one area where excess revenues can be devoted to. We should acknowledge the fact that education is still one of the best tools in poverty alleviation," she said.

The lady senator earlier filed a resolution directing the Senate Committee on Economic Affairs to look into whether subsidies for fertilizer, fuel and electricity granted by the government are reaching their targeted beneficiaries.

The subsidies, viewed by many as mere political gimmickry intended to massage the hurting millions of Filipinos, will be part of projects to be identified in the National Social Welfare Program which the President will launch during her State of the Nation Address (SONA).

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