(Editor?s note: The following is the fifth of major issues that the Inquirer believes need to be addressed by presidential candidates in the May 10 elections. The i-Team Report was prepared by staff headed by Fernando del Mundo.)

MANILA, Philippines?The same job has seen Edward Bataan, 42, through two global financial crises. He may not be aware of how the maneuverings of the country?s economic managers touched his life as he raised a family amid both economic upheavals.

Back in 1998 when government coffers were dwindling in Asia and many currencies lost about half their values, Bataan was already in his third year as volunteer parking attendant at the Harrison Plaza commercial complex in Manila.

Since parking was free and the hundred or so accredited attendants did not get paid, their day?s earnings came from whatever amount motorists thought someone watching over their vehicles was worth.

These days, handing over loose change from the dashboard does not get the same courtesy and goodwill as before. Regulars who give upward of P20 enjoy polite greetings, a wish for safe travel, and maybe, even a reservation of a future parking slot.

?I started here in 1995,? Bataan said, remembering the year he got married.

Back then, the peso was trading at about P26 to a US dollar. Over the next three years, Bataan got practical lessons about currency devaluation when the peso tumbled to P44 to a dollar and prices of goods soared, all while he was raising his first child.

The Bataan family would carry on and in the next 10 years welcomed five more kids. All through that decade, Bataan was hardly aware how the institution across the street succumbed to the onslaught of the Asian financial crisis.

The Central Bank of the Philippines went bankrupt and had to be resurrected as the Bangko Sentral ng Pilipinas (BSP).

Creating the BSP was made possible with the ?seed money? coming from the national treasury, straight from the pockets of folks like Bataan and others who paid all kinds of taxes when they bought food and clothes, rode on a jeepney, or procured whatever goods and services they needed.

Pump-priming

During the recent crisis, the foreign exchange rate and inflation were relatively stable. But to keep the economy afloat, the government had to spend some P290 billion more than the budget of about P1.4 trillion in 2009.

Dennis M. Arroyo, a director at the National Economic and Development Authority (NEDA), explained that the government spent P160 billion to pump-prime the economy, mainly through labor-intensive small infrastructure projects.

Arroyo, who heads NEDA?s national planning and policy staff, said these included some 3,000 ?shovel-ready? projects in the rural areas, such as farm-to-market roads, irrigation and other fast-moving, community-based initiatives.

To cover the deficit, the government?as usual?borrowed from domestic and international lenders by issuing debt papers.

Data from the Bureau of Treasury showed that in the 11 months through November last year, new borrowings from local lenders reached P302.6 billion while those from abroad totaled P238.5 billion.

These included loans from foreign governments, which were meant to fund programs like improving the organization and operation of the judiciary, and projects such as new airports, flood control systems and weather stations.

Also, part of these amounts went to the payment of old debts to keep the Philippines? good record as a borrower?so as to be able to continue borrowing in the future.

But deficits were also incurred because the government?s tax collection agencies did not meet the target revenues, which were a major consideration when planning the national budget.

Revenue collections down

Last year, the Bureau of Internal Revenue (BIR) and the Bureau of Customs each fell short of their revenue goals by at least P50 billion.

Finance Undersecretary Gil S. Beltran explained that the slowdown in economic activity was mainly to blame.

?Manufacturers were turning out less products, companies and households were earning less, and the traffic of import cargoes was dwindling?all resulting in less things to collect tax on,? Beltran said.

Ironically, Beltran added that government earnings last year also suffered due to ?revenue-eroding? laws, many of which were popular. These measures were good for the individual company or household, but not for the nation?s coffers.

Preliminary data from the Bureau of Treasury showed that in 2009, the BIR was not able to collect a total of P52.3 billion because personal exemptions on income tax were expanded and minimum wage earners no longer had to pay the same tax. At the same time, income tax on businesses was lowered to 30 percent from 35 percent.

According to Beltran, foregone revenues due to these tax breaks were expected to increase to P55.5 billion this year.

Budget deficit

When the budget deficit breached the target limit of P250 billion late last year, Finance Secretary Margarito B. Teves strongly urged Congress to stop making new laws that resulted in less taxes.

Instead, Teves pleaded with lawmakers to enact pending proposals that would enhance revenues. These included a bill aimed at weeding out unnecessary tax perks to investors and another one that seeks to raise the excise tax on alcohol and tobacco products.
No word was being said about another round of expanding the coverage of the value-added tax, which was so unpopular that the proponent of the most recent law?Sen. Ralph G. Recto?failed to get reelected in 2007.

Teves said that as the world?s major economies started to recover, giving a boost to minor ones like the Philippines, the government wanted to return to managing the country?s debts to healthier levels.

The finance chief is constantly wary of Philippine debts representing 56 percent of gross domestic product (GDP), the total value of all goods and services produced within the country in a given period. In comparison, debts of neighboring countries like Indonesia, Thailand and Malaysia average 30 percent of their GDP.

Outstanding debts

With total outstanding debts reaching P4.4 trillion as of October 2009, this means each working-age Filipino?15 years and older?has a share of close to P75,000. In any case, it boils down to more debts or taxes, or both.

The Arroyo administration had aimed at a balanced budget during its watch, coming close when the deficit was trimmed down to P68 billion in 2008.

Now, with the government expecting to again spend some P290 billion over the budget to fuel economy's growth, dreams of a deficit-free budget has been put off for much later.

?This can be achieved in 2013, but everything will depend on the next President and his or her administration's plans for the country,? Beltran said.

In the meantime, many households have sought additional sources of income to help make ends meet.

Making ends meet

Bataan, the volunteer parking attendant, may seem to show the resilience that the government had tried hard to muster by sticking to that same activity despite his growing family.

?Pinagkakasya na lang (We try to make whatever we have sufficient),? Bataan said of his earnings, adding that his wife also pinches in for absent volunteers, keeping a six-hour watch over 18 parking slots.

?At night, she sells some foodstuff over there,? Bataan said, pointing to a nearby 24-hour Internet café.

In San Pedro, Laguna, store owner Maricel O. Macorol saw how ?things got bad? as the financial crisis progressed.

Two years ago, Macorol, a mother of three young children, partnered with a relative to set up a small store that sells rice, as well as novelty footwear.

A former supervisor at an electronics firm, Macorol earns a total of P110 a day from ?boundary? fees on three tricycles she bought from her retirement money. That?s a total of P330 daily. She quit her job nine years ago to start a family.

Even with that, she said she had to augment the income of her husband who had acquired a fourth tricycle, a mini-school bus which ferried a dozen children between homes and schools.

Macorol said that over the past two years, footwear sales had gone down because people prioritized food expenses.

?That's why our main item is rice because people will always buy rice in good and bad times,? Macorol said. ?Things got especially bad late last year, after the big storms, but people would buy cheaper rice instead of not buying at all.?