Task force to determine non-infra spending cuts
An interagency task force will look into non-infrastructure spending items that can be cut or shelved in response to revenue losses from a planned deferment of next year’s fuel excise tax hike, economic managers said on Tuesday.
Following a meeting of the Development Budget Coordination Committee (DBCC), Budget Secretary Benjamin Diokno said a “seniority” rule would be followed, which means that the government’s priority infrastructure projects are exempted.
“There will be a seniority in expenditures. Definitely, the most senior will be the infrastructure projects. That will be exempt,” Diokno said in a briefing.
Vehicle purchases, on the other hand, will likely be put on the chopping block.
“I think we have seen so many car purchases in the last few years, we will review that. And maybe calibrate the releases for the cars,” Diokno said.
A day before the DBCC meeting, Finance Secretary Carlos Dominguez 3rd said the non-infrastructure spending cuts could include cash transfers to poor Filipinos and fuel subsidies for jeepney drivers.
At present, some 10 million beneficiaries receive a P200 monthly subsidy from the government under an unconditional cash transfer (UCT) program, while jeepney drivers get P5,000 per month under the Pantawid Pasada Program (PPP).
Both subsidies are supposed to increase to P300 and P20,000, respectively, next year.
Economic managers have endorsed the suspension of a second round of fuel tax hikes, set to be implemented beginning January next year under the Tax Reform for Acceleration and Inclusion (Train) Act, in a bid to contain above-target inflation.
The Train law, part of the government’s Comprehensive Tax Reform Program, raised taxes on a number of goods and services, including fuel products, in exchange for lower personal income tax rates.
A provision in the law allows for the suspension of the fuel tax hike if Dubai crude averages $80 per barrel in the three months prior to the scheduled adjustment.
Crude prices have risen above $80 per barrel recently and Dominguez on Monday said these were unlikely to fall below the law’s threshold before the end of the year.
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