Why is there no clear policy on earmarking? Earmarks are provisions of law or orders which specifies the appropriation of approved funds. There were several attempts in the past to employ some earmarking but most, if not all, failed at the proposal stage. Some are still pending at the committee levels in the respective chambers.
Recently talked about are taxation on text messaging and the road user’s tax. Taxation on text messaging has been a popular suggestion given that there are millions of messages sent everyday. Assuming that there are one million text messages sent per day (which is in my opinion a very conservative assumption), with 10 centavos worth of tax per message will yield to 100,000 pesos of collection per day. In a year, we can generate an approximate of 36.5 million pesos which can be automatically appropriated to education, as proposed.
The same principle is being suggested in terms of the road user’s tax. The collection from car registrations of about 7.5 centavos should be rechanneled and translated to more productive and useful services. Why not use the fund for the rehabilitation of major highways and roads? This will be separate from the annual appropriation for public works.
But there are oppositions to these various suggestions. Why? One big factor is the clash of interests. When a person is taxed, what could have been used for personal expenses will be diverted to paying of tax. This idea makes additional taxation a burden rather than a means to ameliorate the existing condition. Politicians who are vying for re-election would always sympathize with the concerns of his constituency, and thus, it is less likely that these “additional burdens” will be enacted.
However, the taxes are already incorporated. The reapportionment is not the burden of the consumer but of the provider as in the case of taxation on text messaging. There goes another clash. Politicians wouldn’t want to also burden these corporations as they could be potential sponsors come next elections.
Finally, the last clash would be with the opposition on the policy itself by some interest groups. As we are in a democracy, interest groups are permitted to voice out their views on issues affecting them. In this case, there are groups which are opposing tax on text messages. Further, they claim that education should be funded by the state and not by the mobile phone users. Politicians who want to be popular in these groups would support the claims. The issue dies and so as the proposal.
Earmarking could be good as it is good. However, when politicians try to make a compromise between the policy and the people, they usually turn out to be populist and do what is popular than what is, in my opinion, right.
Why do we use line-item budgeting? Line-item and single-year budgeting are siblings, both causing problems in our country. If single-year budget makes extortion possible, line-item budget yields dependency.
How? Line-item budget is a budget which specifies the items for appropriation. Identified are the specific projects, for example construction of a building for this purpose in this place. But the disbursement of funds is not automatic. Projects may be specified and identified but the last say on the release of fund will come from the executive department, no less than the President.
The dependency is between the local government and the President. In order to get the appropriations, one must satisfy the President; that is, he must be an ally. Notice that some of the districts with congressmen who voted against to impeach the President have no fund. Same goes with the senators in the opposition. It is funny, however, that these senators are the crafters of the budget and yet they receive nothing.
The president’s discretionary fund, PDF, or pork barrel as most would know, by its nomenclature, is dependent on the discretion of the president. So friends may get more, enemies not even a centavo on their name (or district). And the pool of money under PDF grows whenever the budget is re-enacted.
The major downside of line-item budgeting is that when a budget is re-enacted, some of the projects in the previous budget are finished. The amount appropriated for the finished projects is diverted to the PDF. It means more funds for the President to manage, and more friends for the administration.
[to be continued…]