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Special report: Cashing in on the elections (Part I)

(The Freeman) - March 21, 2016 - 10:00am

CEBU, Philippines - With just 48 days to go before the 2016 elections and with candidates going full blast on the campaign trail, most entrepreneurs are also scrambling to get that chance to cash in on the elections, not by selling their votes, but rather to earn legitimate income from the fat campaign budget of politicians.

Campaign funds

Issue interception specialist Anecito Canturias said a presidential candidate easily earmarks a conservative estimate of P5 billion to P7 billion campaign budget. A chunk of P500 million goes to consultancy fee on top of other expenses needed for varied promotional campaigns including print, radio and television ads, social media boosting, customized giveaways, and special events, among others.

Although political expenditures are strictly regulated by laws, politicians vying for the government power seats can easily breach the campaign spending limit, thus the money circulated in the country’s financial system during pre-election season is historically known as the strongest economic boosters.

“By tapping NGOs, people’s organizations, and party-list groups, campaign expenditures easily melt down without Comelec being able to keep track,” said Canturias who has been providing strategic advice to several poli-tical parties for 20 years.

Around 70 percent of the campaign funds go to organizational, operational, and logistical activities. These items comprise the vote conversion, delivery, assurance, and protection.

Based on experience, Canturias said TV ad campaigns work only 30 percent of the time. It is good only in increasing a candidate’s popularity and providing voters an understanding of the issues he stands for (platform).

Printing of posters, farming them out to targeted sections of the political economy, and giveaways such as pens, notebooks, lighters, T-shirts, and bar pins, alongside newspaper and radio publicity and media relations management are equally important aspects of the preliminary reach-out strategy.

A two to three hours campaign rally will cost a candidate or a political party at least P500,000,  excluding the talent fee of celebrity endorsers employed by politicians to draw in more people.

Election-preneurs

While traditional media channels, service and product providers take a bigger chunk of the election budget per candidate, there are also a myriad of beneficiaries or election-preneurs making extra cash during elections – down to jobless residents in a particular community.

In every town or city, a political party also needs to establish a headquarters. Traditionally, political party supporters offer part of their houses to be used as headquarters. Although, hardcore supporters for instance publicly say that they offer their vacant space for free, others believe “there is always money behind every move.”

In Metro Cebu, where office space is rare and expensive, homes located in strategic areas are target for campaign headquarters. At present, this kind of specialized business offer a homeowner an opportunity to earn at least P80,000 a month, for a 300 to 400-square meter space.

Other home owners also earn by accepting flyers and banner posting in their properties for a fee. Cost of this type largely depends on negotiations between home owners and the interested party.

A struggling but brilliant artist for instance, could easily make P60,000 to P100,000 by composing and producing a jingle for a candidate. The rate goes up, however, if the composer has an established name.

Meanwhile, average website designing for a political personality online boosting hovers within a P30,000 one-time fee, excluding retainership fees and website management, said a seasoned public relations specialist and political strategist Jonji Y. Gonzales.

A monthly retainership fee and web management service charge in Cebu right now ranges from P20,000 to P30,000 depending on the work load – such as update frequency, content updating, among others.

Nowadays, political aspirants are also paying good social media managers and bloggers to make noise and create intriguing “stories” and other topics that catch the attention of the growing social media community.

A candidate spends at least P300,000 to P500,000 a month to commission a good social media strategist.

Customized rush

The election season is also a time when makers of corporate and customized giveaways feel that adrenaline rush.

Freelance Events, a startup company engaged in making souvenirs and personalized printing services, revealed that a mug printed with the name and picture of a candidate would cost at least P100 per piece. Usually, a political aspirant orders a minimum bulk of 1,000 pieces, which translates to P100,000 raw sales income to the provider.

Philustrate Natad, part-owner of Freelance Events, said that while other customized collateral makers require minimum orders, their company accepts orders even for a few pieces as digital printing enables them to do so.

Mugs and tumblers are just a few collaterals that are in demand, he said. Along with, fans, key chains, caps, among others.

Tumblers bearing the names and faces of candidates cost P180 per piece.

Meanwhile, Cebuana entrepreneur Aida Patana is pioneering the sale of personalized wines with images of politicians. For the May 2016 elections, Patana said they have received orders from both local and national candidates.

Patana claimed she was the first one in Cebu to introduce these personalized wines with the faces of election candidates in the market. Last December alone, they produced a total of 34,000 bottles of these personalized wines, she said.

She owns a trading firm, Cebu Maps Marketing, which distributes various products including the wines of Michel Lhuillier.

Patana’s company also produces campaign shirts, tarpaulins, fans and keyholders in time for the election-related activities.

She said she has been engaged in this business for quite some time now as her company is also active making personalized giveaways even without elections.

Aside from these established businesses that are cashing in on the election campaign spending, there are countless of mom-and-pop businesses in the community areas that are making money by providing leg work services for political groups and candidates, be it for  cooking food, providing housing/accommodations, transportation from motorcycle (habal-habal), tricycle, multi-cabs, buses, pump boats in going to island communities, and other miscellaneous services.

Tax regulation

According to the Bureau of Internal Revenue, registered political parties, party list groups and candidates are considered withholding tax agency.

“As withholding tax agents, they must withhold the corresponding withholding tax for election-related expen-ses such as but not limited to purchases of campaign materials like tarpaulins, T-shirts, boleros, fans, flyers, talent fees of the composer and singer of the campaign jingle and others related thereto,” the BIR said in an earlier statement.

Under existing issuances of the agency, all contributions and expenditures should be reported and that any unused or excess funds are treated as income and are taxed.   The BIR earlier reminded candidates, campaign contributors and political parties for the May elections of their tax obligations. (To be continued)  — /JOB (FREEMAN)

 

 

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