Research group says veto due to failure of political will rather than lack of resources
Think-tank IBON said that government can very well source funding for the Php2,000 pension hike which President Aquino recently vetoed. Aside from citing the leeway from the improved fiscal situation under the current administration that Malacanang has played up so much, the group also said that more aggressive collection of corporate income taxes and raising taxes on the richest Filipino families as additional possible sources for the hike.
According to IBON, President Aquino’s and Social Security System (SSS) officials’ opposition to the hike due to its unaffordability is a failure of political will rather than a lack of resources. SSS officials estimate the Php2,000 hike to cost an additional Php56 billion. But sources of funding cited by proponents such as the Php198 million in foregone revenues from idle assets, as much as Php13.5 billion in collections from delinquent employers, any balance from up to Php325 billion in uncollected revenue as of 2009, as well as the Phpp447 billion in assets as of October 2015 that can be tapped until around 2029 are all reasonable measures within the purview of the SSS, the group said.
IBON also reminded that the SSS Act of 1997 (Republic Act No. 8282) authorizes the national government (NG) to appropriate funds necessary for SSS expenses and laid down additional recommendations:
1. The group said that the reported improved fiscal situation under the Aquino administration already provides room for such much-needed appropriation: The NG budget deficit is down from Php314.5 billion in 2010 to just Php46.5 billion in the first 11 months of 2015, corresponding to its declining share in GDP from 3.5% to just 0.3% over the same period. The Php268 billion reduction in the deficit between 2010 and 2015 represents the leeway for the government to subsidize the SSS pension hike. The additional Php56 billion outlay needed for the Php2,000 pension hike is well within this range, as well as the supposed Php16-26 billion deficit that the SSS will supposedly incur as its revenues fall short of expenses.
2. There is as much as Php409 billion from more aggressive collection of corporate income taxes especially from large corporations. IBON estimates up to Php780 billion in potential tax revenues from firms in 2012 yet only Php371 billion was actually collected by the Bureau of Internal Revenue (BIR). Restoring the corporate income tax to its 35% rate before 2009 would also immediately raise at least Php20-30 billion.
3. Raising taxes on just the richest 1.5% of Filipino families will not only reduce the extreme inequality in the country but also raise some Php91 billion. The richest 156,000 or 0.7% of families had a cumulative income of Php356.9 billion in 2012 with an average annual income of Php2,287,836. Taxing just an additional 20% of this income will raise Php71 billion. The next richest 170,000 or 0.8% of families had a cumulative income of Php198.4 billion with an average annual income of Php1,271,484. Taxing just an additional 10% of this income will raise Php20 billion.
Over the long-term, more effective collection of estate taxes on these super-rich families would raise hundreds of billions more in revenues. The BIR’s average annual collection of estate taxes of less than Php600 million in the decade 2000-2009 compares poorly with the Php3.2 trillion in wealth accumulated today by just the 40 richest Filipinos, IBON said.