Senator Francis Escudero on Sunday branded as a “myth” the position of Liberal Party standard-bearer former Secretary Mar Roxas that the government cannot lower income taxes because this would mean some public services will have to be stopped.
Escudero, the running mate of presidential candidate Sen. Grace Poe, said no public services would be sacrificed with the proposed reduction of income taxes, as contained in pending bills in Congress.
Roxas said those pushing for lower taxes should consider the possible adverse effect of tax cuts on key programs like PhilHealth and the conditional cash transfer scheme.
Lower taxes, he added, could also derail the construction of school buildings and classrooms.
But Escudero said the government’s underspending of P623 billion since 2011 is a proof that it can afford to reduce income taxes.
He stressed the amount of underspending is more than 20 times the amount that finance officials estimate will be “lost” if income taxes are lowered.
“How can opponents of tax reform claim that public services will suffer when the government can underspend that much, and in the same breath, tell us about the gains experienced under this administration?” Escudero said.
“If we can afford not to spend more than P600 billion, then we can afford to ‘lose,’ as the Bureau of Internal Revenue says, P30 billion, without sacrificing the people’s welfare,” he said.
Escudero, who used to chair the Senate Committee on Finance, pointed out that in 2011, the government’s budget was at P1.711 trillion but it only disbursed P1.557 trillion, underspending P154 billion.
In 2012, underspending tapered off to P62 billion based on actual disbursements of P1.778 trillion against the budget that year of P1.84 trillion.
In 2013, out of the P1.984-trillion budget, only P1.88 trillion was utilized, resulting in an underspending of P104 billion.
Last year, underspending was pegged at P303 billion, or 13 percent of the general appropriations for 2014.
“It is not true that the government cannot accommodate tax cuts. The number one proof of this is that government underspending in the past years did not lead to its collapse. In fact, the government has even claimed success in its anti-poverty measures,” said Escudero.