|
By Juan T. Gatbonton, Editorial Consultant
Soaring prices of oil and food have set off
populist cries for policies that would relieve the hardships the
crisis is imposing on the poorest families. Even the bishops are
calling for a second look at the expanded value-added tax (E-VAT)
and the Oil Deregulation Law that enables oil companies to raise
their prices without deference to the Energy Regulatory Commission.
But the financial authorities are not likely to
give up the easy-to-collect—if regressive—tax that has fattened
government finances so dramatically. As for oil deregulation, it has
effectively de-politicized oil pricing—whose fluctuations had set
off street demonstrations and transport strikes since the 1970s.
Subsidies govt is paying
To soothe popular feeling, the Arroyo
administration has increased the range of direct subsidies it awards
to the poor.
Since November 2005, it has been running two
hunger-mitigation programs. The “Food-for-School” program pays
one kilo of rice for every day that a child from a poor family
attends a public daycare center, pre-school or Grade One class. The
“Tindahan Natin” program sells socially priced rice and instant
noodles. These two programs cost P2.9 billion yearly.
In addition, the government has begun
subsidizing small electricity users (P2 billion). It is also
awarding scholarships and student loans (P1 billion) and setting up
another P1-billion fund for bus, taxi and jeepney conversions to
compressed natural gas.
So far, the administration has committed itself
to spend nearly P7 billion altogether in direct subsidies to the
poor. And it threatens to spend even more. But subsidies of this
type are typically unfocused, wasteful and ineffective. They are no
more than dole-outs—handed out more for their political impact
than for their practical usefulness.
This is why both the “Food-for-School”
program and the socially priced stores cover the 17 cities and
municipalities of Metro Manila, the National Capital Region (NCR),
though poverty incidence in this region is no higher than 6.4
percent.
Even in relatively efficient states, delivery
costs of social-welfare subsidies can run up. In the United States,
they exceed well over 17 percent of total program costs. By their
very nature, direct subsidies are also hard to monitor. And the
bishops are right to worry about the liabilities of corruption.
More lasting welfare programs
Now is a good time to start up longer-term
programs to raise the poorest groupings in the national community
closer to the level of the average. Historically, the Philippines
has been one of East Asia’s most unequal countries.
In 2006, the richest 10 percent of Filipinos had
19.2 times more income than the poorest 10 percent. The mean income
in Metro Manila is three times the mean income in the Autonomous
Region in Muslim Mindanao (ARMM), the poorest of our 16
administrative regions.
Administratively, there has been a relatively
large variation in access to infrastructure and social services
across regions and island groups.
Life expectancy in the autonomous region in
Mindanao is fully 13.5 years shorter than the national average! That
is a measure of how disadvantaged some of our administrative regions
are.
ARMM the most deprived
Just how deprived the ARMM is has been
documented by the Philippine Business for Social Progress (PBSP). In
2000, poverty incidence there was 68.8 percent, when it averaged
34.2 percent nationally.
Functional literacy was only 61.19 percent, when
nationally it was 87.8 percent. Less than a third of all ARMM people
had access to potable water, when nationally 76.9 percent of all
Filipinos do. Infant and maternal-mortality rates are almost double
what they are nationally.
These PBSP figures were put together from 1997
to 2000, when the relative mean income in the autonomous region in
Mindanao was 40 percent that of NCR. By 2003, it had declined to
only 29 percent, so that we must assume the overall situation in the
region has worsened. No wonder the government cannot conclude
successfully its peace effort with the separatist Moro Islamic
Liberation Front.
‘Positive discrimination’
By now, standard practices have been developed
in many countries to give preferential treatment to groups or
regions in national society that have been disadvantaged either by
government policy or popular prejudice.
Certainly Muslim Mindanao, the ethnic groupings
in the Cordilleras and the poorest regions—Bicol and Cagayan
Valley, Caraga, Western and Central Mindanao, Central and Eastern
Visayas—can reasonably claim preferential treatment in
national-budget allocations for infrastructure, primary health care
and basic education.
A time-bound “affirmative action” program to
bring up access to these social services by people living in these
poorest regions to the level of the average administrative region
within, say, 12 years (two presidential terms) will certainly
justify the government’s retention of the E-VAT—and more
militant prosecution of the state’s effort to raise the lagging
tax effort.
Investing windfall profits
Like the energy industry, the government through
the E-VAT is earning windfall profits from inflated prices. Rather
than being frittered away in direct subsidies and their attendant
corruption, these windfall profits are better invested in
budget-based primary health care and basic-education
programs—which will generate good returns in higher productivity,
incremental-income flows and altogether better Filipinos in future
years.
|
