BAGUIO CITY—Baguio City Budget Officer Leticia Clemente predicts that the global fuel crisis will trigger a decline in tax revenue next year, creating a heavy impact on government spending at both the local and national levels.

She noted that while the transport sector felt the crisis first, its ripple effects are now reaching essential commodities and the agricultural industry. Clemente warned that a prolonged crisis would severely strain the national economy and hamper tax collection at all levels, potentially forcing budget cuts for many local government units.

Clemente stressed that the taxes paid by the businesses are obviously affected by the ongoing global fuel crisis. She said this impact will be felt by next year when businesses will start paying their taxes for the current year of operations.

She explained that the reduction in taxes paid by businesses is expected to decrease the city's projected revenues, which will subsequently affect the preparation of next year's annual budget. This follows a period of growth as the city is currently operating on a P3.6 billion budget, representing a significant increase from the P3 billion budget utilized by the local government in the previous year.

The budget officer remains optimistic that the global fuel crisis will subside soon, allowing affected business sectors to recover and consumer spending to rise as the economic situation stabilizes.

The formal process for the upcoming fiscal year begins in July when the city budget office issues the call for proposals. By mid-October of this year, the proposed annual budget will be submitted to the local legislative body for a series of deliberations.

The passing and proposal of the annual budget is essential to avoid the necessity of operating on a reenacted budget. Operating on a reenacted budget would likely hinder the implementation of development projects and diminish the quality of basic services provided to the community.