GOV'T HAWKED STATE ASSETS TO TURN IN GOOD FISCAL REPORT

Malacañang cannot gloat over its last year's fiscal performance as a lower-than-projected deficit which was achieved through the sale of state assets and the questionable system of booking government's own tariff payments on its rice imports as revenue, Sen. Chiz Escudero said.

The government was looking at a P63 billion deficit last year, but President Arroyo had hinted Thursday last week that it would actually book a surplus, a year ahead of schedule.

Escudero said that the so-called fiscal balance is no cause for jubilation since it was "far from a tax collection-driven achievement."

"On the contrary, it was realized largely through the 'Midnight Madness' sale of government corporations , coupled with under spending, plus the Enron-like booking of government's own tariff payments on rice imports as revenues, " Escudero said.

As of November 2007, privatization already brought in P90.5 billion to the public coffers, way above the P25.2 billion target for the full year.

"Clearly, there was a jump on revenues because government decided to dump its shares in some government and private corporations. It's as if a family earned more money in a year because it sold its heirloom in a series of garage sales," he said.

Successfully put on the auction block last year was 80 % of the government's shareholding in the geothermal power producer PNOC Energy Development Corp. (PNOC-EDC) which fetched P75.6 billion, of which P62.6 billion was remitted to the national treasury.

Other assets were 46% of Philippine Telecommunications Investment Corp., a major shareholder of Philippine Long Distance Telephone Co., for P25.2 billion; a former airport property in Iloilo province, for P1.2 billion; and a minority stake in Philippine National Bank, for P998 million.

On the other hand, the use of the Tax Expenditure Fund, appropriations used as tax payments, also ballooned three-fold from the programmed P9.8 billion to P27.5 billion in the first eleven months of the year.

"This left-pocket to right-pocket transfer of government funds, which inflates both government expenditures and revenues were the reasons why Bureau of Customs managed to meet a few of its monthly goals, Escudero said.

Illustrating the big impact of privatization and TEF on overall revenue performance, Escudero said "privatization alone more than made up for BIR and BOC under performance".

The two agencies posted a combined P65.1 billion shortfall for January to November, with the BIR managing to collect only P647.6 billion out of its P700.9 billion goal for the period, or a shortage of P53.2 billion.

The BOC, despite the massive dose of TEF on rice imports, posted a P11.9 billion shortfall for the said period, raising only P195 billion out of its P207 billion target.

Privatization proceeds were equal to four months' worth of Customs collections, he said.

While the total income of the government may be bigger, Escudero said the band-aid job of selling state assets hides what would eventually be a lower tax effort.

But it was not only in the "fire sale" of assets that helped government turn in a good fiscal report card, "there was also help in the expenditure side, by under spending," Escudero said.

Government was supposed to spend P1.082 trillion in the first eleven months but ended up disbursing P1.031 trillion or P50.4 billion less.

Due to the fact that it was premised on a P51-53 to a US dollar exchange rate, interest payments for January to November plummeted to P255 billion from the scheduled P288.3 billion, or a dip of P33.1 billion.

"Interest payments estimates are deliberately inflated as it is a hedge against poor revenue performance. By using a higher peso-dollar exchange, our debt service program is designed to yield savings, which is in turn used to offset revenue shortfall," Escudero said.

Escudero said government also spent less for personal services, P314 billion as against the programmed P327 billion.

Almost two back-to-back elections this year also put a dampener on infrastructure spending, forcing government to spend P121.1 for capital outlays in the first 11 months, P18.4 billion lower than the programmed P139.6 billion.

Apparently savings in debt service were not plowed back to more schools or new hospitals. "Rather, they were used to cover up weak revenue performance. The tax dividends promised didn't materialize. They were used not to help the people but to help taxmen save face."

Escudero went on to say that the government's formula in posting a surplus is hawking state properties, cut spending, pay your own tariff.

"Government is pulling wool over our eyes but the threads are so flimsy that we can see the numbers through their spin" the senator ended.