A poll conducted in the last quarter of 2017 by Grant Thornton stated the obvious. Filipinos in business ranked 4th in global business optimism. A total of 36 economies were polled, from OECD economies to emerging ones, and that represented a sense of a global perspective from the business side of things.
The global average on business optimism was 58 percent, a decent one, but Filipino business executives, according to the poll, hit a high note of 86 percent, topped only by those in Indonesia, Thailand and The Netherlands. Of course, that was before the US Congress passed a “tax reform” package that was a giveaway to the super-rich, which Mr. Trump promptly bragged about in a meeting with the leaders of US business. Post the passage of the tax scam passed in the guise of a “reform package,” US business would have been polled as the most optimistic in the world.
The bullishness and the giddiness will heighten this year for Philippine business, and why not? If Philippine business had bliss under Mr. Aquino, they have heaven under Mr. Duterte.
The projection that the country’s largest corporations, by and large publicly-listed, will soon be reporting banner net earnings is not an idle, but an evidence-based, statement. Corporations that will report less than P5 billion in net earnings for 2017 will be praying that their earnings report may merit even three paragraphs in the business pages, to hide their shame. Those that will earn P1 billion or less will be tempted to do a hara-kiri – for failing to join the bandwagon of jumbo earners. And we all know to which pockets the earnings will go.
Considering the limited players in the equities market, cross-ownerships and the legal boondoggles that guarantee that the majority owners get most of the corporate gain, there is this assurance that after the dividends have been paid off, the bulk of the gains will go to the tycoons that control these corporations with uber earnings. The case of having your cake and the pleasure of eating it, too – that has been the story since Mr. Aquino assumed power.
The business professionals surveyed just reflected the Cloud 9 state of their principals in the Grant Thornton poll.
The finding that 60 percent of the yearly income gains goes to the top 1 percent – the rest of the 40 percent makes do with the tira-tira (crumbs) – is a little bit outdated, in the sense that the top 1 percent could get more in 2017, with another upward adjustment this year.
Like Mr. Aquino, Mr. Duterte allowed the status quo on labor bargaining to remain weak and ineffective. Even the pro-DU30 labor leaders will tell you that there has been a real effort to prop up the dying state of the trade unions to increase their bargaining power to adjust labor’s share of the income gains. Institutional support from the state to usher in a more labor-friendly environment did not come about, hence, the steady weakening of labor’s bargaining power and the steady rise of capital’s share of the yearly income and productivity gains.
Mr. Aquino’s six years in power elevated several members of the Philippine rich to the status of “those-who-can-buy-a-small country-rich.” That list will surely increase under Mr. Duterte.
The best is yet to come for the super-rich
The state of Cloud 9 in the world of oligarchs and plutocrats is further pushed to a new level, buoyed by the commitment of the DU30 administration to anchor Phase II of the supposed tax reform package on the reduction of the corporate tax rate. From 30 percent, the plan is to reduce it to 25 percent, or lower.
Nothing lifts the optimism of the rich more than the promise of a corporate tax cut and they feel nothing will stop the DU30 administration from pursuing this course of action.
A corporate world awash with profit – and with labor shackled as a bonus – is hardly the ideal environment to push for a corporate tax cut. But the DU30 administration said it will be done. Mostly likely, it will be done.
Corporations, with their armies of lawyers and accountants, have this ability to routinely pay below the 30 percent tax rate. Some say the effective corporate tax is even below the planned 25 percent. So if the official rate is reduced to 25 percent, the effective rate that the corporations will pay, will go down substantially.
Even the promise that the incentive scheme granted by the Board of Investments and other government agencies will be rationalized to offset the revenue drops from the corporate tax cut will not come about. The main incentive to the rich in any market economy comes in the form of a corporate tax cut and that is what they truly covet.
During the term of Mr. Aquino, I had a piece that said the government “was for the rich, by the rich and of the rich.”
Nothing much has changed under Mr. Duterte. I repeat. If the super-rich had bliss under Mr. Aquino, they have heaven under Mr. Duterte.