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There is emerging realization that the combination of record high
food prices and record high oil prices is going to devastate the
Philippine economy, particularly the bottom 30 percent of the
population.
Two senators, Mar Roxas and Loren Legarda, are
advocating a shift in government economic policies to cushion the
people from the impact of the economic crisis. However, it was
Governor Joey Salceda of Albay who first warned of the imminent
danger from the twin scourges of high food prices and high oil
prices. When oil hit $130 per barrel, he reckoned that the bottom 30
percent lost about P156 billion of their purchasing power in the
first half of this year alone.
Indeed, according to estimates by industrialist
Raul Concepcion, the average household spends 55 percent of its
income on food. But the poorer households, those in the bottom 30
percent, allocates a much greater percentage, 71.55 percent. Almost
P72 of every P100 of the very poor’s income goes to food alone.
Add to that the spending on fuel, light and water—most of which
uses oil to be produced—5.75 percent, and you have a situation
where the poor spends almost P78 of every P100 just on food and fuel
alone.
Where will the poor then get the money for
keeping themselves healthy, sending their kids to school, paying for
the rent, indeed, keeping body and soul together?
One option is steal. I myself have been a victim
of robbery twice in two weeks in the past month, one in the office
and another in my home in BF Homes.
The other option is revolt against the
government. Unlike in America where the Supreme Court has just
upheld the people’s right to bear arms, Filipinos don’t have
such a constitutionally mandated right.
So you have the ridiculous situation of a
blabbermouth lawyer like Bono Adaza being accused of planning to
plot a coup against the government. I have known Bono for more than
30 years. He sounds anti-government most of the time but he seldom
puts his money where his mouth is. So PNP, let him go.
Now, if UP-trained lawyer Bono has deteriorated
financially to such a point that he now resorts to extortion, then
that’s how bad the economy has nose dived to, in which case, the
solution is not to charge him with extortion but to harness his
incredible energy to help in the economic recovery program.
We now come to the third option. Get our heads
together and think of how to rescue the poor from further poverty.
Concepcion says the oil companies must recover
P16 more from the pump price of diesel to prevent them from losing
money as a result of the rise in crude to $145 a barrel. Allowing
the opportunistic oil firms to pass on the 16-peso added cost to
their operations to consumers will bring diesel to above P71 a
liter. I think before the end of 2008, diesel price will reach P100
at the pump.
I fear that P100 per liter of diesel is the
threshold when the dam of people’s seething anger will finally
give away. Then we will have a deluge.
To prevent us from reaching that point,
Concepcion has a number of sensible solutions. He says the
government must use its windfall revenues from the value added tax
on petroleum products and Malampaya profits, amounting to billions,
to subsidize the poor’s purchases of LPG, electricity, and basic
goods like rice and canned goods.
Removing the 12 percent VAT on LPG bought by the
1.6 million poor households in the country, Raul estimates, amounts
to only P125 million, peanuts given that the government rakes in
billions from its royalties from Malampaya gas revenues.
In fact, according to estimates by Oscar Lopez
of First Holdings, which owns 33 percent of Meralco, electricity
rates could be brought down dramatically, by 28 percent, if the
government were to waive its royalties (39 percent of the selling
price of Malampaya gas to Meralco or 16 percent of the total Meralco
rate) and its 12 percent VAT on the gas. Note also that the price of
Malampaya gas is indexed to world crude prices.
When the Lopezes signed to buy the Malampaya gas
in 1998, oil was at $15 a barrel. Oil has risen in price by nine
times (866 percent) yet the cost of producing Malampaya gas has not
even doubled (or risen 100 percent), resulting in windfall profits
for the government.
Clearly, the government is in a position to give
something to the poor, especially the very poor.
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