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Philippine fiscal history

CROSSROADS TOWARD PHILIPPINE ECONOMIC AND SOCIAL PROGRESS - Gerardo P. Sicat - The Philippine Star

Little is systematically known about Philippine fiscal history in the country’s historical literature. Much of the Philippine history in colonial times is political in nature and is focused on events, personalities, and episodes.

When specialists, for instance, economists – took toward studying the economy, much of the attention, too, is on trade, the exchange rate, money, on industrialization, and tariffs (in the sense of protection).

This is clearly an open field of active inquiry that should reward a good research study.

Fiscal outlines of the colonial period. Spain colonized us for 400 years and the United States for a much shorter time, roughly 40 years until the establishment of the Philippine Commonwealth in 1936.

Spanish colonial times. Spain’s control of the Philippines depended on its use of political power over the territory – from its inhabitants to collect taxes and other forms of tributes and fees. These revenues enabled the financing of government and its projects.

In summary, such control depended on the cedula (or the poll tax); on government monopolies (such as those on the galleon trade while it lasted, on tobacco, on opium); on lotteries (and other forms of gambling); on the sale of documentary stamps and other forms of collections.

Polos y servicios, another form of tribute, was also an exacting element of financing public projects. The practice involved forced labor imposed on Filipino adult males for periods of up to 40 days.

Spain’s colonial practice also involved the institution of the Catholic church. The Spanish colonizers gave the friar orders large tracts of lands to help them undertake their evangelization. Such gifts of land enabled the church, through the friar orders who came to the country, to spread religion through teaching and to gain obedience of the faithful to the church.

A similar grant of large landholdings was also distributed to private citizens who helped Spain in stabilizing the political control of the territory. These favored citizens evolved into the wealthy and powerful class of citizens that helped prop up Spanish rule over the long run.

American colonial period. There are distinct periods of history that need to be set apart. For brevity, we divide this into four major periods, treated as follows.

[1] The military government. After the transfer of the Philippines from the Treaty of Paris, President McKinley moved swiftly to study the new territory. While military consolidation of occupation was taking place, two commissions of experts were dispatched in succession.

The first commission was headed by Jacob Schurman, the president of Cornell University, and four other members (which included two military men, one of whom was Admiral George Dewey). After several months of hearing, the Schurman Commission submitted its report in January 1900 that justified occupation and annexation.

Immediately, President McKinley took the recommendation of the Schurman Commission to appoint a new commission with a wider mandate.

The second commission, headed by William Howard Taft, was constituted, along with four other civilian members. All of the men would eventually leave a mark on the civilian governance of the new territory. The second commission went to study more deeply the governmental requirements for a civilian government. It undertook a lot of public hearings, traveled around the country to study its requirements and its mood.

In the meantime, the military government, in order to support the running of the government, relied basically with what it had inherited from Spain as the basis for running the machinery of government, only with minor adjustments. American military officials were of the impression that the Spanish government was able to sustain its operations from its existing revenue system. US government support of the military operations for pacification might have veiled the reality that the limited Spanish system was inadequate.

[2] Philippine Organic Act of 1902. The enactment by the US Congress of the Philippine Organic Act of 1902 set the stage for the administration of the affairs of the civil government of the new American territory in the Pacific.

By then, the president of the US was Theodore Roosevelt who had suddenly succeeded the assassinated President McKinley. The new president would appoint Taft to the position of civil governor. Other members of the Taft Commission would continue in the new government.

The Philippine Commission would act as the governing body for the civilian government. The civil governor is executive head of the government.

The Philippine Commission went to work quickly to reform the revenue system so that it could effectively fund the needs of the government. The task was one of re-engineering the revenue system to fit the American mold.

The customs duties were simplified. Charges for the coinage of money were stopped. Discriminatory taxes on Chinese traders were abolished. Government monopolies on cockpit operations were abolished. Lotteries and opium dens were closed.

Other revenue changes included: (a) 10 percent custom duty on imports based on official valuation; (2) 10 percent harbor improvement tax on basic tariff; (3) fixed taxes on some operations were replaced by ad valorem taxes; (4) imposition of consumption tax on liquor, beer, cigar, flour, salt, etc.; (5) gobernadorcillos and cabezas de barangay were taxed along with common citizens; and (6) adoption of a property tax at 1.5 percent of market value in place of the urbana tax.

There was an important provision of the Organic Act that could only be implemented a few years later. This was the provision for a Philippine Assembly, which was a directly elected political organ to represent regions of the country. To do it properly, a population census was first to be taken and the results published.

This was fulfilled. After several years in 1907, the full Assembly was constituted.

In the conception of the Organic Act, the Philippine Assembly would serve as the training ground for new political leaders. The civilian government would be bicameral in nature. The Philippine Assembly would become the lower house. The upper house would be the smaller Philippine Commission.

All laws were to be implemented by the executive, the civil governor who was also chair of the Commission. All acts of the government still had to conform with the over-arching laws of the United States, the colonial power in charge.

(To be continued.)

 

 

For archives of previous Crossroads essays, go to: Philstar.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

PHILIPPINE FISCAL HISTORY

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