Opinion
MONDAY, JUNE 5, 2017
A5
Tax reform and poor consumers VOTING 246-9 with one abstention, the House of Representatives last week approved on third and f inal reading the so-called TR AIN Bill, or Tax Reform for Acceleration and Inclusion, the f irst of the Duterte administration’s muchvaunted tax refor m package. The rationale is founded on government’s vision to reduce poverty, achieve high middle income status with a target of $4,000 per capita gross national product in an environment of national and regional peace. To achieve these goals, investments will require additional funds of around P1 trillion per year on top of the current levels. While just taxation and infrastructure are certainly laudable and long-overdue, upon closer scrutiny, the implementation of TRAIN is set to unduly burden the already difficult life of low-income consumers. On one hand, the proposed tax package seeks to lower the rate of personal tax income, allowing workers to take home more from their wages. To cite, some 1.8-million minimum wage earners will be exempted from income tax. This extra money, however, can effectively be eroded by the higher prices of goods and services that would predictably arise from the increase in excise taxes of oilbased products. In particular, consumers of 12 mostly oil-based prod-
ucts, such as estimated the open unleaded and potential imthoughts leaded gasopact of the bill line, diesel, on inflation. orlando and liquefied Critics in oxales petroleum gas, the House of can witness a Representadrain in their tives have deresources. The TRAIN Bill cried the Duterte administraseeks to raise the excise taxes tion’s aggressive ‘railroading’ on these commodities by P3 of the TRAIN saying that the per liter by 2018, P2 per liter oppressive taxes will run over more by 2019, and another P1 all Filipinos, and most espeper liter by 2020. This already cially the poor. casts a wide net. After all, a Bothersome is how the perbulk of the country’s public ennial problems of plugging utility jeeps and buses run on the leaks in tax collection and diesel and many homes rely on spending is not being given LPG. due attention. Some studies, Outside this, the proposal is for instance, have shown that especially punitive in the case a substantial level of revenue of buyers of new vehicles, who generation are achievable will have to pay an additional through measures like intax of between three and 120 creasing the efficiency of the percent for vehicles that cost Bureau of Customs’ tax colP600,000 up; consumers of lections, checking rampant sugar-sweetened beverages, smuggling, and minimizing whose juice drinks, soft drinks, corruption. and instant coffee mixes are set Also critical is the governto be levied a P10-hike of ex- ment’s policy shift in its precise taxes a liter; and renters ferred funding mode from of houses or apartment units Public Private Partnership to with rental fees below P10,000, Official Development Assistamong others. ance. The implications of this Many of these will victim- shift cannot be overstated, ize the poor, contrary to the especially to the ordinary avowed spirit of the tax reform taxpayers, who, on one hand, package. In particular, the are the ultimate beneficiconsumption of coffee mixes, ary of Duterte’s Build Build powdered concentrates, and Build mantra, but will also soft drinks is heavily skewed collectively finance, directly toward the D and E demo- or indirectly, the envisioned graphic. But even outside this, boom. some economists say the govThe foremost advantage of ernment has severely under- the PPP model, of course, is
its reliance on private-sector resources, taking advantage of the high liquidity in the local financial market and in the process saving the government from additional debt and foreign exchange risk. Experience also teaches us that the private sector has had better expertise and therefore success in terms of efficiently building and operating infrastructure projects. The sluggish pace of many PPP ventures is not inherent to the model, as some officials point out; in many cases, issues like cost overruns arose due to failures of coordination and planning, chief of which fall on the government’s side. On the other hand, arguments against ODA include the lack of accountability stemming from an administration’s six-year term limit, the strings typically attached to ODA funding, and the user-pay principle, which saves Filipino taxpayers who will not use the project from the undue burden of subsidizing it. Thus, the implications of the passage of the Duterte administration’s tax reform package are many and multifarious, some of which go beyond taxation. But if the ultimate destinations are social justice, inclusive growth and sustained national development, the rails of the TRAIN Bill must be built through the most sensible route, something that intervention from our senators will hopefully ensure.
Game Theory and Trump’s climate negotiations By Mohamed A. El-Erian THE run-up to the announcement by President Donald Trump on Thursday that the US was withdrawing from the Paris climate agreement illustrated the inconsistent approaches being taken by America and other major countries. The longer this persists, the greater the possibility that America’s pursuit of short-term benefits in certain areas would come not just at the risk of longer-term damage, but would also undermine an overall global construct that has served it well and could still do so over time. After earlier threats to dismantle the North American Free Trade Agreement and impose punishing tariffs on China and Mexico, Trump alerted the other 194 signatories of the 2015 Paris accord that the US was thinking about withdrawing from this laboriously negotiated agreement. This was met with dismay from several leaders of US industry, countries, the United Nations and the Catholic Church, among others. It also led other systemically important countries to announce a commitment to abide by the terms of the agreement,
regardless of what the US ended up doing. In this case, unlike with international trade, Trump made good on his warning. He announced that the US would no longer be part of the accord, stop meeting financial and other requirements, and only rejoin if terms were renegotiated in his nation’s favor. Also, in contrast to existing trade arrangements where America’s major trading partners (Canada, China and Mexico) signaled openness to negotiation before the US took unilateral action, the rest of the world’s positioning on the Paris accord issue failed to be sufficiently enlightened by the insights of game theory. As a result, it was ineffective in the short run and will likely prove unsustainable over the longer term. To best understand this in simplified game theoretics, and using its terms, think of the US as now having decided to play what used to be a cooperative global game in an uncooperative manner. Given that it is the most powerful country in the world, it is a credible approach for the US and one that, in certain circumstances, could even deliver im-
mediate gains in the short term. situation than they would have In the particular case of the otherwise realistically attained Paris accord, for example, the had they cooperated in a credpossible short-term benefits ible fashion. If they care about come from the notion that the environmental sustainability, US can free-ride on the climate and they must, they would then commitments of others, while have no choice but to try and minimizing its own financial come together with the US in contributions and retaining pursuit of a new collective sowide flexibility on how it pro- lution to a common problem motes and uses its energy re- and a shared responsibility. sources. Over the longer term, In the interim, the potential however, the absence of the US damage would not be limited to would severely undermine the the environment. Given the deep beneficial impact of the agree- nature of cross-border interconment. And since the US cannot nections and interdependencies, insulate itself from the effects such episodes erode the integrity of global climate change, it and effectiveness of the global would also face an array of en- system, threatening costly fragvironmental and environment- mentation that reduces win-win related threats. outcomes, undermines collecThis situation also puts other tive action and forces a greater participants in a tough position. need for self-insurance by indiWhile other nations can col- vidual countries. lude and try to go it alone, their Bloomberg collective action is unlikely to be sufficient to meet the objectives of the accord, which was meant to be a building block rather than a destination. They would find themselves locked with the US in a “prisoner’s dilemma”—that is, Fr. Aquino’s column will a scenario in which both resume soon. parties end up in a worse
The murky... From A4
But the wife of a Pampanga congressman was among the 37 who died. We do not know if she was a regular casino-goer people I know. They probably did not go or was just at the wrong place at the wrong that night or were some of the lucky ones time. For sure, security will be tight at the who escaped during the mad stampede other casinos in town after the Resorts World rampage. for the exits.
Gambling is a big-time, profitable business. The country wants to compete with Macau and Singapore in getting its fair share of gambling money and the foreign tourists who come, not just to gamble but also to see some of our renowned tourism spots.
Requiem...
tangas-Laguna-Cavite corridor would be hastened. The secretary was from Batangas City, mismo. But as things turned out, the MICT was expanded. Look at the traffic congestion it has spawned. I read somewhere that the major port operator, ICTSI is finally looking at Cavite as a new location for a container terminal, somewhere near the Sangley area. It’s a location more than 25 years late. *** Former senator Orly Mercado once remarked that the problem with us Filipinos is we cannot seem to see beyond the tip of our (flat) noses. Lee Kuan Yew saw how Singapore was in 1960, and envisioned how it ought to be in 1980, thence 2000, and beyond. He built his city-state one part of a grand vision at a time. Tayo? One problem at a time, often too late and after the problem has festered without solution, creating crisis and chaos. The other day, a two-meter-long part of the international (and domestic) airport runway
From A4
Earlier on, in fact during my first job in government as Postmaster-General of the then Bureau of Posts, the organizers of an international conference of dentists that was to be held in 1986 saw me about a proposed commemorative stamp which had already been approved by my predecessor until the Edsa revolt installed a new government.. They wanted assurance from me that the same would be pursued. They showed me artworks of their proposed stamps, and one of these featured a colorful jeepney. I initially objected to the jeepney feature, arguing that what was then considered an icon of Philippine culture was something that we should not promote, because it was archaic and a step backward from the transport viewpoint. But I relented because apparently they had incurred expenses in having an artist design the proposed stamp. Besides, I could see that the dentists thought the jeepney, with its colorful sari-manok de-
sign, was a source of national pride. Today, in the age of Duterte, when “change” has become policy and praxis, regardless of the political cost, the jeepney is to finally be phased-out. It will be difficult, and many will be displaced from their current livelihood. But it must be done. *** Harking back to those times, I remember that it was also suggested to secretary Nani not to allow the expansion of the international container terminal in the Port of Manila. The use of containerized cargo was relatively new in the country at the time. Most were still loaded and unloaded break-bulk, which was time-consuming and inefficient. The suggestion was for containerized cargoes to be unloaded in the Port of Batangas instead, which was then being built under a Japanese loan facility. Subic at the time was still an American naval base. Traffic will be congested in the metropolis as soon as container trucks use our narrow streets as they travel from port to warehouses and factories. Besides, if Batangas port were to be utilized, the industrialization of the Ba-
Lessons from a tragedy THE lives and property lost in the Resorts World tragedy would not be in vain if we recognize, and learn from, the lessons it brought. One is a lesson in disaster preparedness. Many died because they were asphyxiated from the smoke caused by the burning of carpets and other items by the suspected gunman. Because those in rooms heard numerous loud gunshots, they did not know whether to run out to escape or hide in their rooms. No one was leading anyone out even if the gunman wasn’t firing at people. If the managers on duty and the staff of Resorts World had prior training on disaster management, they would have been able to check all the rooms as the chaos went on and led the way out to trapped people. They would also have known that the gunman was not firing at people and therefore what needed to be done was to lead people to exits. This reminds me of the day the strongest earthquake hit the Philippines—the one that destroyed Baguio, La Union and other provinces in the north. I was then a young lawyer working in a law firm in Makati. When the tremors started I took cover under my desk. What amazed me was that our boss was going around the rooms checking on each of us instead of taking cover himself as the quake was so intense things were falling from tables and it was difficult to keep one’s balance while standing. If only someone like him were in the Resorts World when the tragedy struck. Another lesson from the tragedy is the need for better security management. What begs to be answered is how the gunman was able to bring into the casino hotel high-powered firearms. There was obviously a lapse in the system of screening incoming guests. And this lesson should cascade to all establishments because there There must is no longer any safe place on the planet against all be new protocols sorts of disasters, whether caused by terrorists or plain in disaster lunatics and psychos. It has preparedness crossed my mind many times that malls, supermar- and leadership, kets and grocery stores are ticking time bombs. The security security systems in many such establishments are far management, from reliable. Very often, dealing with nextguards in entrances use a small stick—rather than of-kin, and media a metal detector—to peer routinely into handbags responsibility. and backpacks as though their sticks have eyes and noses that can detect deadly weapons and metals. Third, when disasters happen, the families of victims should not be left outside waiting for news, or worse, the bodies of the confirmed dead. I saw on TV how the parents and next of kin of those who were trapped inside Resorts World were railing and crying in anger, disgust and frustration outside the premises. Media persons had a field day interviewing relatives of victims many hours after the incident as they were all just standing outside, in grief. In situations like this, parents and relatives of victims should be brought to a comfortable holding area with a person of authority who can explain to them what is going on as well as professional coaches like psychologists who can help them through their agony. Leaving them on the streets aggravates their suffering and worsens their anger and frustration. Finally, the biggest lesson should be learned by news reporters and media practitioners, including those who write for social media. In the Resorts World tragedy, a social media-news outfit immediately reported that the casino hotel was under attack by the ISIS. This news spread like wildfire such that even the airports locked down. All flights were canceled. A ground crew of the Philippine Airlines narrated that there were talks of hiding the planes as these might be targeted by the terrorists. The flight cancellations caused needless losses to airlines and undue stress and inconvenience to passengers. Worst of all, because the tragedy happened at a time when Marawi city was still under siege by the Maute band of terrorists which traces its links to the feared ISIS, the false media reports immediately sent a message to the rest of the world that truly, the Philippines is an unsafe place to be. Thus, several countries immediately sent out advisories to their citizens against traveling to the Philippines. The media, both mainstream and internet-based, must learn to check and double check the accuracy of their facts before shooting out reports that can cause panic. For the sake of those who lost their lives, this tragedy must be studied and remembered for the lessons it brought. And such lessons must lead to new protocols in disaster preparedness and leadership, security management, dealing with victims’ relatives, and media responsibility. Email: ritalindaj@gmail.com Visit: www.jimenolaw.com.ph was damaged. Not the fault of Naia GM Ed Monreal who has been doing a marvelous job despite inherited problems, but because of poor maintenance and natural wear and tear, while his predecessor slept in blissful nonchalance. Of course, the entire airport complex, from runway to four terminals, has seen better times. The façade is beautiful, and quite modern when it was first built some 40 or 50 years ago. But while our neighbors envisioned terminals and runways good for the next 50 or more years (as in Changi, Chep Lap Kok, Kansai, Pudong) ours has remained an icon of obsolescence. The LRT Line from Baclaran to Balintawak was one of the first in Southeast Asia when Marcos built it in 1986. Look at it now, and look at how LRT 1, 2 and MRT have failed to provide the kind of quick
and efficient mass transport that our once “poorer” neighbors have. And weep. Opportunities lost. Meanwhile, tempus fugit. Time, as they say, marches on. *** Last week, senator Eva Estrada Kalaw, a feisty leader, a fervent nationalist, a great friend, was laid to rest. I wish I could fly back to the country to personally condole with her family but I was sidelined by a bad cold in Taipei. Tita Eva was a mentor along with Tito Doy Laurel in the incipient stage of the fight against dictatorship, when I was deputy secretary-general of the Unido. Later, she was appointed chairperson of the Manila Economic and Cultural Office by President Joseph Estrada, a position I now hold. She will be greatly missed. Ave atque vale. Hail and farewell.