President Gloria Arroyo on Wednesday said the Palace will submit a proposed 2006 national budget of P1 trillion to Congress next month.

"The deadline is usually one month after Congress opens for session so that's August 25," the President said during a press conference in Malacañan.

She added that new taxes will fund the proposed budget. Congress earlier passed a P907-billion budget for 2005.

Congress opened its second regular session Monday.

Mrs. Arroyo explained that the Philippines' national budget system is different compared to the United States where vital government functions are halted once lawmakers fail to pass the proposed General Appropriations Act.

"The Philippines can reenact the previous budget unlike America," she said.

Before the President's State of the Nation Address (SONA) Monday, senators said they will prioritize the 2006 budget even if the House of Representatives preoccupies itself with the impeachment case against Mrs. Arroyo.

Senators Sergio Osmeña and Juan Flavier said they remain committed to enact a new budget next year.

Osmeña predicted that although Senate would be tied up in the impeachment case, they would still prioritize the budget once it is transmitted to them.

Sen. Joker Arroyo said earlier that he was concerned the country may again end up with no new budget next year due to the impeachment process and the proposal to amend the Constitution.

The president usually submits the proposed budget for the next fiscal year to the House of Representatives right after the SONA. Both houses of Congress have until December to pass the budget.