EDITORIAL

The politics of compromise for the greater good

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SUBTLE just isn’t in the vocabulary of the Duterte administration when it comes to pushing for economic reforms that must be approved by Congress, particularly the tax reform agenda that calls for lower income and corporate taxes but higher and additional excise taxes on transport and petroleum products.

If we go by the avowed statements of the Department of Finance, every local and foreign business chamber in the country and almost every nation friendly to the Philippines, particularly to the economic managers, “support” the tax reform package now sitting in Congress.

Yes, almost everyone, except the lawmakers themselves who must sign, seal and deliver it to Malacañang for that coveted presidential signature that will turn the measure into law.

Four months since it was delivered to Congress in September, the draft bill hasn’t been given the big-deal treatment and attention it supposedly deserves–from the point of view of the administration’s economic team–for the greater good and benefit of the nation.


In fact, the draft bill has gotten the ire of the emerging opposition in both chambers of Congress. In sum, the senators and congressmen see the provisions on excise taxes on fuel as ill-timed and likely to elicit higher incidence of poverty despite its proponents’ argument that the poor will be shielded from such ill-effects via cash transfers and other forms of government subsidy.

The context for a better perspective on the situation is this: oil was trading at around $45 per barrel in global markets around the time the draft bill was submitted to Congress. Since then, members of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC exporters of the commodity have agreed to cap their production levels to normalize prices. Now, benchmark Brent crude is trading at $55.45 a barrel.

Raising the excise tax on gasoline and placing a tax of P6 per liter on diesel–which currently has a zero rate–would of course hit hard logistics and transportation. The result would be catastrophic in terms of the cost of public transportation and basic commodities due to the higher cost of deliveries.

We know where the opposition is coming from. But where is the aggressiveness on the part of the economic managers coming from?

“Rising business activities in the country have worsened the traffic situation and caused severe traffic congestion, more so in urban areas. Over the past years, the Philippines has been spending more and more on infrastructure to improve mobility, consistent with the aim of sustaining a robust economic growth,” according to the latest, “ECONOMYPH, A Snapshot of the Philippines’ Economic Path,” a publication of the National Economic and Development Authority.

The bottom line is of course more money to spend on development. That is why it follows that the bottom line of the tax reform agenda is raising more revenue from the taxpayers, in spite of the seemingly pleasing show card that says lower income and corporate taxes attached to the reform package.

“From an amount equivalent to 1.8 percent of gross domestic product (GDP) in 2010, the allocation for infrastructure in the national budget has continually risen to hit 4.3 percent of GDP in 2015. The Duterte administration aims to further ramp up spending on infrastructure over the next six years, looking at spending as much as 7.1 percent of GDP by 2022,” according to ECONOMYPH.

The conflict between the Executive and the Legislative is inevitable and has come to the fore. To paraphrase the 17th-century Dutch philosopher Baruch Spinoza: No matter how thin you slice it there are always two sides to a conflict.

Before the showdown erupts, both sides must allow the wisdom of cooler heads to prevail. The administration needs the money to finance its ambitious economic development programs, but the lawmakers are saying this is not an auspicious time to raise taxes on transport and petroleum products.

The heart of the matter is socio-economic development, which both sides are advocating for a better tomorrow. With that common ground established, there is no compelling reason for the Executive and the Legislative not to seek a compromise for the greater good. After all, compromise is still the rule of thumb in life and in politics, especially when the greater good of the nation and people is at stake.

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3 Comments

  1. With bottomless greed, same politicians-thieves, same traitor businessmen in collusion, all government undertaking are doomed and bound to be wasted. Another round of taxation will just be another painful sacrifice for nothing.

    Even now, the snail-paced government actions and execution of plans, are just too much wasted time, so painfully inefficient and expensive (notice all the three branches – in the middle of a tournament in sloth?).

    Collusion of government staff, politicians and greedy business is a major problem. They have ransacked and destroyed the country, now they all should be eliminated first before any meaningful sacrifice can be rightly imposed on the people.

    For a change, how about restraining a bit the real (not the doctored) profit margin of energy and oil cartels and verify by correct/honest/proper accounting and continuous audit and valuations?

    Perform close supervision of all business and government undertaking related to vital concerns by honest/competent third party; zero out extortion and corruption by government staff and politicians by ejk if necessary

    Changing system of doing business and governance with an iron hand is the solution, not another round of taxation that will just be wasted by same old monkey business.

    Then we can all contribute and do what needs to be done. But change and clean up first.

    • Dump the law mandating 10% ethanol being mixed on gasoline ! When the bill was proposed It was premised that our then sinking sugar industry can be saved by making ethanol from sugar for mixing with gasoline as was sponsored by Sen Zubiri. This was not economically, operationally and technically feasible even then and especially now after the sugar market improved significantly. And since we cannot produce ethanol locally, we are importing ALL of these at high costs today and a severe punishment to the consumers BUT large and increasing largesse to the local importers. This must stop !

  2. and what are your views regarding these proposed taxes? shouldn’t you offer an opinion?

    You stated about the need to increase spend on infrastructure. Why doesn’t the government push for the huge increase in private car registrations, as in 5x? After all, the spend on infrastructure because of these cars are huge compared to the prices of these cars. It is about time that car owners pay for the infrastructure. Of course, this is in conflict with the government’s avowed support of the car industry.