The government has been putting a lot of positive spin on the appreciation of the peso and the surge of investments in the stock market. For the past weeks, the financial sector has indeed been showing positive signs. With the peso strengthening against the US dollar, even breaching the P53/$1 level coupled with the decline in the 91-day treasury bill rates and the surge of investments in the stock market, one can be tricked into thinking that all is well with the Philippine economy, as the Arroyo administration would like to put it.
Thirty years ago the economic debate between Democrats and Republicans was framed in terms of the case for bigger versus smaller government. Democrats emphasized market proclivities toward monopoly and inequality, failure of markets to efficiently provide public goods, market incentives to pollute, and above all the tendency of markets to produce less than full employment. Republicans countered that such market failures were over-stated. More importantly, using government to solve market failures could lead to even worse problems of government failure associated with bureaucratic inefficiency, policy misjudgments, and private capture of regulatory agencies. In an imperfect world, Republicans argued that it is better to live with the problem of market failure and opt for small government, than try and solve it by resort to big government.
Financing for development is evidently a key issue in the global response to the challenge of meeting the Millennium Development Goals (MDGs). It is a tough challenge to raise additional revenues to fight global poverty and foster all-sided development. Notwithstanding recent initiatives for significant debt relief for the poorest heavily indebted countries and some trade concessions to developing countries, much still has to be done to generate enough resources for development and anti-poverty spending.
The proposed legislation on the value-added tax (VAT) is likewiseheaded towards a heavily compromised revenue measure. The VAT proposalhas two main features – an increase in the VAT rate from 10% to 12%,and a broadening of the coverage of VAT.
Reformers are divided over this issue. Mainstream economists havecalled for the rate increase to stem the fiscal crisis. Their argumentis simple: the VAT, among the proposed tax measures, has the capacityto generate the biggest amount of revenues. A two percentage pointincrease in the VAT rate is equivalent to P25 billion in additionalrevenues.
For government to be able to function and fulfill the role assigned toit, it must collect sufficient resources and allocate and use thoseresources efficiently and effectively. In this regard, any assessmentof the government budget cannot proceed without an implicit recognitionof the integral relationship between revenue and expenditures, the twoprincipal elements of fiscal policy. Thus, the analysis of this paperassesses not only expenditure program but also the revenue program ofthe President’s Budget for 2001. In particular, the President’s budgetproposal is evaluated in terms of two principal objectives of a goodpublic expenditure management: fiscal discipline and strategicallocation of resources.
A common reaction among economists when one mentions gender is, “Gender? Aren’t there more important things in this world?”
This reflects the common notion that gender equality is something one
should be concerned with only after what are perceived to be “more
fundamental” problems have been addressed. From this point of view, the
more fundamental problems include eradicating poverty, narrowing income inequalities, protecting the environment and ending hunger, among others.