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Business

Shared misery solution

DEMAND AND SUPPLY - Boo Chanco - The Philippine Star

“Should we waste P33 billion in a subsidy program that has little impact?”

That’s a valid question from Rep. Stella Quimbo of Marikina, and the technocrats at DOF cannot disregard her simply because she is a technocrat herself, a respected economist (PhD, UP) before she won her congressional seat.

The difference now is that Rep. Stella is no longer dealing just with numbers in a mathematical model, but is in constant touch with ordinary people. She sees first hand how people live their lives, what their problems are, and how the government should help.

“As an economist, I believe that the government response must pass three tests. First, the relief provided must be immediate. Second, the relief must be sufficient. Third, it must not be inflationary. Reducing excise tax rates across select fuel products is still the best way to go…

“I believe it is important that people receive immediate relief by not having to pay excise tax, Filipinos will quickly get much needed ayuda at the point of purchase…

“Pag sinabi mo kasing magbibigay ng ayuda, sinasabi mong ‘you face the price increase and then I will reimburse you with ayuda.’ Whereas if you suspend taxes, nandun na yung ayuda mo because you don’t pay the tax anymore.”

Alas, Duterte accepted the recommendation of DOF. The needy will go the tortuous route through government agencies, which will take them months to get the ayuda.

“’Di tayo magaling mag distribute ng ayuda that’s why the Committee on Ways and Means said let’s just suspend the collection of taxes because it’s the same relief,” Rep. Stella told ANC’s Headstart.

As for the DOF proposal to give cash aid of P6,500 for public utility drivers, she observed: “Based on the current increase, that’s only good for 13 days and only good for 380,000 drivers. Paano yung 4.5 million na tricycle drivers? Wala pa dyan habal-habal drivers,” she said.

Makes one wonder if DOF technocrats are pulling numbers out of thin air or just hard of heart.

Rep. Stella explains how to deal with reducing/ removing excise taxes on fuel products:

“We’ll just select the products. ‘Yung ginagamit ng mahirap i-zero natin yan, pero yung ginagamit ng mayaman wag natin i-zero, i-reduce lang natin. There’s relief for all income classes, but there’s bigger relief for the poor lower income classes and smaller relief for the richer ones.

“Suspend only taxes on diesel, LPG, kerosene that the lower income classes use more. In the case of gasoline, do not suspend the collection completely, but reduce the tax from P10 to P4.35 for P91 and below, and from P10 to P7 for P91 and above,” she said.

She also doesn’t think it is rational to put up an Oil Price Stabilization Fund (OPSF).

“Mas maganda ang deregulated. Why? Because it’s really the market forces, the supply and demand that will determine the prices. One, you need to have enough subsidy funds for you to intervene.

“Second, you need to know exactly how much mo ipe-peg ang presyo. ‘Di natin alam yun eh, magkakamali at magkakamali. ‘Pag underpriced, magkakaroon ng excess demand… Hindi talaga siya rational. Parang anachronistic siya kasi we’re towards deregulating market.”

The lawmaker also proposed that the Philippine Competition Commission be included in the task force of the Department of Energy and Department of Justice looking into fuel prices.

“Because of absence of competition pwede talagang magkaroon ng excess profits (it is possible to have excess profits),” she said.

So refreshing to hear a member of Congress speak with such authority on economics without losing empathy. Unfortunately, she is just one. Joey Salceda is the other.

The other thing is, why do DOF technocrats love to scare us that there won’t be enough money to run the government. Have they looked at the possibility of streamlining expenditures?

Because we are in a crisis, shouldn’t everyone in the government offer to cut expenses? A shared misery solution is one way of telling the public we are all in this together and will all contribute what we can.

According to the 2022 General Appropriations Act (GAA), the total amount allocated to both houses of Congress is P30.63 billion for 2022. Malacañang has about P5 billion in confidential funds. We are not talking about pork funds yet, and that is where so much fat can be cut.

The bureaucracy is bloated. It is time we cut down the number of government bureaucrats shuffling papers and producing red tape. We can save money and improve efficiency.

Rep. Quimbo said that when they were reviewing the national budget, they found so much unused money floating around government agencies.

As for Build Build Build infrastructure projects, the government can reconsider its unfriendly attitude towards private sector participation. The new draft rules for PPP projects are saying, no thanks… we don’t need you.

BBB is just a cover for supposedly infrastructure projects that are really pork barrel in nature and benefit politicians more than the public. The really important infrastructure projects with national impact will be attractive for private investors to invest in.

The real priorities that only the government can do and must fund are social welfare projects like education and health. Our pandemic experience makes it clear that it cannot be business as usual in these two areas.

Even then, there is a lot that the private sector can contribute, such as in education, for instance, if there is a proper program.

They can also improve tax collection. It is horrible that the Duterte administration has failed to collect the 20 percent withholding tax on e-sabong. They should even impose a big gross tax on e-sabong beyond the normal income tax. Easy to trace billions in taxable winnings via GCash. And collect the overdue P203 billion estate tax from you know who.

Yes, our people need instant relief from the high cost of living. And those who need help most need it right away.

But don’t insult our people with P200 a month ayuda that will take months to get. As Rep. Stella said, why waste money on a delayed dole out that won’t help?

 

 

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco

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