“I just read an article (was it Politiko?) that I’m refusing to spend, because I refused to borrow. That is not true,” said Dominguez during a Sulong Pilipinas briefing via Zoom.
Dominguez was reacting to an exclusive report of Bilyonaryo.com.ph, “Binarat! Senate approves minuscule P140B stimulus fund as Dominguez balks at massive spending even if PH economy collapses” which was also reprinted on its sister site Politiko (polictics.com.ph).
Dominguez cited constitutional restrictions for being adamant in limiting the stimulus package to P130 billion (the Senate approved a P140 billion stimulus package after being warned, through an intermediary, that President Rodrigo Duterte would veto any amount beyond that).
“The Constitution says we cannot have a supplemental budget that is not supported by additional revenues or savings. Right now, we have no savings, we have used it all up. We have no additional sources of revenues on the horizon,” said Dominguez.
He cited Article 6, Section 25, paragraph 4 of the 1987 Constitution which states: “A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposed therein.”
The government has already advanced the remittances and cash available in the Treasury to bankroll the P100 billion a month budget for the social amelioration program and spending to boost health facilities, COVID testing and protective gear since the enhanced community quarantine was imposed three months ago.
Dominguez said the government has borrowed funds to finance the cash shortfall for this spending but it has assiduously kept its 2020 spending program (“We are not exceeding P4.1 trillion”) while being mindful not to exceed its self-imposed, deficit to gross domestic product (GDP) rate of 10 percent.
“People say borrow money, but loans do not qualify as additional revenues or savings. This administration has borrowed the most amount of money in any five-month period. We have funded with borrowing our spending, but it is still within budget,” said Dominguez.
Dominguez prefers to spur the economy through credit stimulus and tax cuts through the proposed CREATE ( Corporate Recovery and Tax Incentives for Enterprises Act) bill which proposes to cut corporate tax rate from 30 percent to 25 percent this year.
Dominguez said the tax cuts would immediately lead to P43 billion in reduced income tax for the rest of 2020.
“This is stimulus program money left with the private sector. For me, that is more efficient in stimulating the economy than passing a program to a government agency. (Through CREATE), we leave money directly in the hands of the private sector and they can use those funds to retain their employees or maintain and expand their operations,” he said.
“(CREATE) will leave P600 billion to the private sector. If you ask me, that is more effective and efficient,” he added.