The Department of Finance(DOF) is opposed to allocating taxes collected and royalties from the Malampaya Natural Gas Project to the Armed Forces of the Philippine(AFP) Modernization Fund.
In lieu of the Natural gas dividends, the finance department proposal that the AFP seek budgetary support each year.
A report by the National Tax Research Center Showed the the DOF is unlikely to support House Bill 4336, which allocates to the AFP Modernization Act Trust Fund the national government share from the Malampaya Revenue.
"The proposal maybe untimely at this point when the government is still consolidating its gains from recent tax policy reforms and trying to improve its fiscal situation, NTRC executive director LIMA D. Isorena said in the position paper."
"Once the proposal is pursued, it will have the effect of eroding substantially the revenues base which is used as the basis for the entire government budget programming," she added.
Under the bill, the amount to be generated from the proposal is envisioned to help the realization of various AFP projects geared toward the improvemeny of its weapon system, technology acquisition, bases and facilities development.
The AFP'S Trust Fund cannot support the acquisition of major weapons and nonweapon equipment and the desired technology and infrastructure repair massive funding with amounts to P3.616 billion from May 29, 2002
to December 30, 2005.
The national government share amounted to P2.393 billion in 2005 since 2002, the national government share total P6.146 billion.
This is dividend between the national government and local government unit of palawan at 60 percent and 40 percent, respectively.
The government last set aside a portion of its budget for the AFP modernization program in 2002 at P5 billion.
As a general policy, earmarking of revenues is discourage because its limits government flexibility in allocating limted resources to important and equally urgent expenditures, Isorena said.
For tarnsfarency and efficiency in fiscal operations, she said all collections should be remitted to the Bureau of Treasury to form part of the government general fund.
Friday, May 26, 2006
The Manila Times Business