In this time of crisis, it behooves us as a nation to close ranks and, in the spirit of compassion, strive to alleviate the sufferings of the worst hit of our brothers.
The government by its nature is expected to lead this endeavor and is thrashing about for ways and wherewithal to respond. There are disagreements as to the adequacy and the appropriateness of the adopted modalities and their delivery. For example, the one time 500-peso direct subsidy to Meralco lifeline users disbursed via a limited number of Landbank outlets is very inefficient and costly for its intended beneficiaries.
Other sectors, therefore, have proposed specific alternative approaches to the problem. In particular, the Catholic Bishops” Conference of the Philippines (CBCP) has proposed the lifting of the VAT on oil and the review of the oil deregulation law as ways to deliver alleviation to the poor. Senator Mar Roxas has been especially scathing in his criticism of the take-and-give stratagem of the government, reading this as politically motivated. Embattled Meralco’s proposal that NAPOCOR reduce its charges and government it tax take belong to the same category. The logic is very simple: government forgoes its tax take; prices will fall or will rise, less to reflect the reduced impost; the public at large experiences some price relief. This is the suspend-for-price-relief stance.
This stance contrasts with the government’s stand to date: to continue collecting the taxes and use the proceeds to partly finance the provision of targeted safety nets for the most vulnerable in society. Thus far, these have come in the form of the 500 peso one time subsidy to lifeline customers of Meralco, the 2 billion pesos conditional cash transfer, the income tax exemption for minimum wage earners and provision of subsidized rice for the most vulnerable in society. We will call this the collect-for-targeted subsidy stance. The Consumer and Oil Price Watch (COPW) proposals are in general agreement with this latter stance except on the extent and size of safety net program. For example, COPW favors the earmarking specific revenues for specific subsidies, such as the use of VAT on petroleum for food and electricity and the royalty proceeds from Malampaya for LPG purchased by lifeline users of electricity.
These contrasting stances all come under the rubric of government safety net provision. Within this rubric, the cost of safety net provision is born by the government and financed by taxes whether collected or foregone. The viewpoint here is: “Ang gobyerno ang yuyuko habang umiikli ang kumot.” The debate is between the collect-plus stance and the suspend-plus stance.
The second of the CBCP’s proposal calling for a review of the oil price deregulation law hints that the 1998 deregulation law is somehow to blame for the high price of fossil fuels at the pump and that re-regulation (government-administered pump prices?) will somehow reverse this. This proposal comes under the rubric of administered price provision. Proposals under this rubric are financed not by the government and general taxes but by some or other private groups operating in a given market. To the same category belongs the earlier floated proposal for government mandated reduction in prices outside the normal regulatory framework (SMS messaging and NLEX access fees), which fortunately has so far failed to gain traction. The divide here is whether administered pricing with the view to help the poor do in fact help the poor.
While these proposals are all driven by compassion, they do have the different impacts on the poor and the economy both in the short and in the long run. We will analyze each of these debates and confront them with the imperative of common sense.
Should the government collect the tax to finance safety nets or should it forego the tax for price relief?
The collect-for-targeted subsidy stance favored by the government and COPW better serves the safety net provision ideal than does the suspend tax stance. Safety net provision entails the concentration of relief on the poorest to ensure the minimum number of people falling below some accepted standards ( MDG’s $1 a day person, say). When government holds on to its tax revenue, say from VAT on petroleum, in order to help finance the targeted safety net expansion, the relief is concentrated to very poorest where it has the greatest bang. It will keep more people from falling below the net.
By contrast, the price relief due to tax suspension benefits both rich and poor alike and the portion going to the very poorest quickly dissipate to insignificance. Thus while lifting VAT on petroleum will lower the pump price of diesel and gasoline which will comfort both SUV owners as well as jeepney and tricycle riders, a targeted subsidy program for public utility conveyance (perhaps with the use of vouchers) would lower the pump price for public conveyance users more than would the lifting of VAT for the same fiscal drain. It will not benefit the more affluent private conveyance owners where relief is less needed. Thus there is effectively a redistribution of resources from richer to poorer. It thus serves better the Rawlsian criterion of minimized disparity in the allocation of resources. In a society where poverty incidence is already very high and resources limited, keeping the poor above starvation requires all available resources and then some.
The classic brickbat against targeted subsidy provision is the “leaky bucket problem” (in current controversy parlance “systems loss”): the pipelines of delivery can be very leaky and result in the diminution of relief to the intended beneficiaries. This is a very old problem and is especially acute in weak states where larceny and theft is rampant.
Fortunately, the technology of targeting has become smarter with the use of technically sophisticated identifiers, such as electronic IDs, geography-based access and verifiable markers, such as Meralco lifeline receipts to reduce if not eliminate collateral damage.
A brickbat that is more difficult to parry concerns this government: it may not be smart or apolitical enough to employ such technical advances; it may not be competent enough to prevent the hijacking of, and/or it may not be honest enough to itself keep from stealing, the provision in transit. Corruption and venality in a soft state teaches us to be naturally wary. The government comforts its critics when the one-time 500 pesos subsidy for lifeline customers is mandated to be collected from a few Landbank branches. This can be so easily corrected by a simple reimbursement to Meralco for reductions in lifeline rates. On the other hand, the subsidized rice scheme and the conditional transfer seem less problematic although their reach is still largely urban.
Transitory emergency employment programs (such as tree planting, irrigation maintenance and yes, even like those funded by the road maintenance tax during the last presidential election) will not be out of order. These will need to be provided as well in the regions and may need reprogramming of government budget over and above “unprogrammed funds” which cover only the urban poor. Funds for the likes of the Panglao International Airport, a project which is wrong environmentally and economically, should be rechannelled.
The government may consider replacing the laughably feckless mandatory drug test for drivers and emission test for motor vehicles with random testing with very high penalties. Mandatory testing punishes all for the sins of a few and effectively transfer resources from poor jeepney and tricycle drivers to the lucky testing franchise holders. In the net, the safety net upside of the government’s approach seems to dominate its the leaky bucket downside .When government needs even more resources to expand direct and targeted subsidies, the better part of prudence is for government to hold on to its tax revenues.
The proposals under administered price provision are the most dangerous. Most salient among the examples is the call to re-regulate the oil industry. First of all, there is no evidence whatsoever that administered pricing in the oil industry will prevent world petroleum price escalation from getting reflected in the pumps. Even oil rich countries (Indonesia and Malaysia) have been forced to reflect world prices in the pump to stem the fiscal hemorrhage.
Before 1998, pump price was administered through the OPSF and yet world price increases had to be reflected if with a lag in the pump prices. The foot-dragging on the adjustment of oil prices under OPSF led to the chronic near-bankruptcy of the Philippine government and the Philippine central bank, a principal source of long-term anemic growth. That is why administered pricing in oil had to be abandoned in 1998. Foot-dragging on the adjustment in the pricing of Napocor generated power resulted in near-fiscal crisis in 2003. Only after we bit the bullet on Napocor rates did the fiscal consolidation and economic rebound become possible.
Administered pricing is like a cocaine fix: a temporary relief paid for by a permanent disability. The Roman emperor Diocletian in 300 AD in a well-meaning attempt to deal with the escalation in food prices mandated a reduction in the price of staples proclaiming death penalty for violators. The good news was that the price inflation in staples stopped; the bad news was that staples disappeared from the market.
Our own experience with rent control should serve as a cautionary tale. Rent control in Metro-Manila offered relief for those already domiciled. But for the ever increasing number of families subsequently entering the shelter market, it became a real burden. The supply of new rentable apartments dried up as investors shunned them. Young families paying 12,000 pesos a month lived side-by-side with old tenants paying 3,000 pesos a month in the same apartment row. It had to be abandoned.
Before the privatization of water services in Metro-Manila in 1997, piped water tariff was very low. The only problem was that cheap piped water seldom flowed, long queues were the order of the day and the poor bought trucked water at exorbitant prices. In the end, it was the poorest who bore the tremendous cost of administered pricing.
The stories that go on and on have all one lesson: administered pricing violates hard-nosed common sense. A mortgaged future is the harvest of such short-run expediency. And so anti-poor a future to boot, the. CBCP has to reconsider which side of the poor it really wants to be.
These are clearly difficult times but there opportunities here as well. The executive and the legislative should find common ground especially in the reprogramming of spending not only towards mitigation but even more importantly towards the seeding of a future marked by ever smaller carbon footprint: incentives for increased use of and investment in renewable energy. It is now high time we make allies rather than enemies of the two energy sources abundant in the tropics: wind and solar. A small but meaningful start is making our streets bicycle-friendly. In the case of food, we need to enable more public-private partnerships and seriously pursue the potential in corporate farming to modernize our food sector.
The government is duty-bound to provide adequate and timely safety nets in the name of compassion. It is also its duty-bound to parlay common sense to safeguard the future. Just as compassion should not sanction boorish behavior, it should not rule out common sense.
Raul V Fabella of the School of Economics, University of the Philippines
Serving compassion and common sense in times of crisis
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ummmmm,what????..english please..
Compassion to the less endowed or what we call the marginalized sector in our society has always been taken for granted. What ever our government does is superficial in nature. Take the so called subsidy to the poor by giving them five hundred pesos (P500) is an insult. With skyrocketing price on basic commodity, that amount is just a comfort for one day.
We find PGMA as farcical, artificial, and inconsistent. How can she give away such a meager amount while in her latest trip to the United State, in just 10 days, she and her lap dogs has spend approximately one million dollars ($ 1,500,000.00) and a half or the equivalent in pesos of sixty seven and a half million (P67,500,000.00).
Her mission was to talk to President Bush, and also, to meet the American Chamber of Commerce. For the President Bush visit, she thinks she can get much of anything (beggar), when all along the U.S. President still remembers how our Philippine Troops in Iraq was hastily pulled out. According to one U.S. announcer, we broke the Guinness Book of Record as the very first nation who run away from an obligation.
And to her speeches to the U. S. businessmen, what ever good picture she says about investing in the Philippines, I can only surmise that she made a fool of herself. Speaking of the advantage of investing in the Philippines is out of the question. Remember, our government confiscated the AIRPORT TERMINAL THREE by using legal strategy. The German and Japanese Investors in that project were caught flat footed. They didn’t know that our government can go to the extend of being “Balasubas” or in short GREEDY.
One of our Senators lambasted the American investors regarding Electric Power Generation during a Senate Inquiry which was related to MERALCO, so how could PGMA has the gull of speaking to the American Businessmen, when in fact, they know now that our government is whimsical in its dealing with investors.
Our country falls last in investment priority in the whole Asian region precisely because of graft and corruption in government. And for PGMA to waste so much money, sixty seven and a half million, for a speaking engagement is plane stupidity, short of moron.
Remember that at the time she left the Philippines, there was already a calamity in the making cause by typhoon Frank. Secondly, the Sulpicio ship has sunk in the morning that day, yet, our tiny President, seven hours later, left the country.
And of all people, one of her lap dogs with her is the head of the Disaster Committee which is responsible in coordinating different government agencies when natural calamity occurs. She just totally ignores the event as though everything was normal.
What compassion to the poor are we talking about? PAGCOR gave donation at the instruction of Malacanang, TEN DAYS (10) after typhoon Frank has left. And while PGMA was abroad for 10 days, the people of Panay were left at the mercy of the element. Wet and cooled, homeless and desperate, hungry, and some are sick, they have to suffer, because PGMA is the only figure that can galvanize the government agencies into action. And on top of these, some of the people in Panay that were affected by typhoon Frank has to wait for PGMA and her press corp. arrival before they will receive their relief goods. What a “pakitang tao “.
Right now, billions of pesos is wasted in the Calbayod, Allen road in Samar province because instead of rehabilitating the highway, our corrupt government is merely turning a blind eye, while the contractors and subcontractors are using inferior materials. Instead of using rocks and gravel, 18 inches deep, before laying the concrete, they are using ordinary soil sprinkled with undersize gravel. What a waste!
Or government tries to indoctrinate the ethnic Filipino regarding our economic problem. They say that overpopulation is the single core of the problem. I say no! Why don’t we sent back the ethnic Chinese back to their country to lessen our population? If Malaysia can do it, why can’t we. For sure, all Cabinet members and ninety five percent of Congressmen, seventy percent of our Senators, and all the members of the Supreme Court will vacate their positions, because these positions are primarily occupied by ethnic Chinese.
Then and only then can we call our country as our own.
Has anyone wondered why despite GMA's being an economist, she decided to alleviate the sufferings of the poor by giving away hard-to-receipt, non-self-generating P500 cash aid to the needy?
Has anyone wondered why despite our critical environmental problems, DENR is spending hundreds of millions of pesos for the titling of untitled lands?
Has anyone wondered why the gas companies lowered their prices by P1.5/diesel liter without favorable market forces?
Has anyone wondered why Zip-Lock Neri was delicadezalessly brought to SSS?
Has anyone wondered why EVAT Recto is now with NEDA?
Has anyone wondered why GMA seems to have a softer stance with the MILF?
no feedback.
you discuss everything. too long to understand.no point of contention. it is well taken.
i am good only in short story and not for a novel.
A TIME FOR COMPASSION, A TIME FOR UNDERSTANDING; NOT A TIME FOR RECRIMINATIONS, NOT THE TIME FOR CRITICISMS
These are difficult and trying times. Hardest hit by the severe economic downturn are the poorest among us. They are the recipient recently of government dole outs partly in cash, partly in goods to tide them over during the crisis. The financial help is not enough indeed but it certainly helps even in a small but comforting way to alleviate the difficult moment. But critics look at this differently, negatively. Because it is understandably not enough. Some look at it as simply a political gimmick to win points. Others deplore dole outs and insist to employ the old proverb on survival, that is, teach a man how to fish and he feeds himself forever.
I went out to talk to some of these recipients and told them the misgivings and apprehensions of some critics over the dole outs and this is how they express their sentiments truly in the Pinoy fashion. It is true the financial help is not enough to last for a day or two, but the sense that they are remembered at all at this time of great need is greatly appreciated. Whether the help was given in whatever form or manner, political or otherwise, did not matter to them. If politicians give freely at time of elections why criticize them when they offer help at time of crisis, they said. Those against dole outs do not even bother to give at all, they added, they just criticize because they dislike the one giving, lamenting why all this is seen as a political gimmick. This is why they appreciate Erap in spite of what he had done, one said in parting.
I went further beyond this because I also agree with the concept about teaching a man how to fish for his survival. Could all the money given as dole outs contribute more to job creation? It turns out the dole outs are part of the excess funds accruing from over 100 billion pesos raised from the e-vat. And since funds for job creation from the e-vat have been budgeted and set aside already the excess is being given as direct cash assistance to the poor. This I think is the better way of refunding the e-vat for the direct benefit of the poor than if the e-vat on oil is suspended because then only the more affluent car owners will benefit than the carless majority. For what all the critics have to say on the issue, I think the dole out makes sense.
Blah! Blah! Blah!, empty speeches, empty promises by PGMA. Where is the 1 billion pesos promised by herto buy high breed rice to raise production. Where is the subsidized fertilizer, where is the subsidized insecticides? I don't see any of these items? Farmers still buys these commodities at commercial price which has doubled in just seven months.
Just like MMDA Chiarman Bayani Fernando who stated that "from now on, floods in Metro Manila is a thing of the passed".... these politicians! As though politicians can legislate contrary to what comes natural. He is crazy if he thinks that he can stop water from flowing downward.
If the government really pities the poor, if they really care at all, especially PGMA, why not start by stopping summary executions. Criminals should be brought to court, not eliminate them. And unfortunately, majority of the so called criminals belong to the group “D”, which is the poorest among the poor. This is what the Supreme court Judge Puno stated in his speech during our Independent day celebration recently, “That our country is full of human rights violation.”
If our government really cares for the poor, how came that way back 2006, there were 280 million pesos (P280,000,000) worth of medicine which was allowed to expire in the Department of Health warehouse, medicines which could have benefited thousands of indigent patients in our public hospital. I, for one have experience how you are treated a public hospital in Maasin, Leyte. I had a motorcycle accident, and the Public physician gave me a prescription to buy outside the hospital. Since I was immobilized, and no companion, I was left alone with the prescription on my lap, helpless and immobilized.
How came that two hundred million worth of books, computers and etc, was left stagnant in the Department of Education warehouse while these items are so much needed in the province. In fact, three (3) students to a book is the norm.
The International Monetary Organization made mention that in 2006, two hundred seventy billions pesos (P270,000,000.00) worth of imports arrived in the Philippines, yet our Bureau of Customs only registered approximately one billion and nine hundred million pesos (P190,000,000.00) worth of goods. What happen to the difference of eighty billion pesos (P80, 000,000.00)? Such a big discrepancies considering the customs duties such as tariff, import taxes, EVAT, so on and so fort; these taxes could have gone a long way in poverty alleviation. Is our government compassionate by turning a blind eye to the corruption in the Bureau of Customs? What happen to the twenty one (21) X ray machines inspected by the First Gentleman before it was shipped to the country? Are the X ray machines also blind? How pitiful the poor is. They don’t deserve a corrupt government while they are left to themselves. Five hundred pesos subsidy! S H _ T! “PAKITANG TAO!”
The uncollected taxes in the Bureau of Customs could have built many tenements for our homeless, just like what the Thailand Government did when they expand their highways. They built hundreds of tenements for their homeless, fifteen story high, with so much multipurpose ground space below. Here? Nada! Our squatters are thrown to the street, sometimes they are beaten, and there meager building materials from their former house confiscated or destroyed.
If Lord Jesus Christ would ever came at this moment, He would be born in the squatter area, and He will be one among the poor people who will be maltreated by our government. Thanks to Bayani Fernando, who is an ethnic Chinese. History will later on tell how these ethnic Chinese and their forefathers has enrich themselves and maltreats the ethnic Filipinos in his own country.
It is a fact that to commit genocide, all you have to do is to deprive that race from getting enough nutrition, short of depriving them the basic needs such as food and shelter. Keeping the price of food high, beyond the reach of the masses is one way. The White Americans during the early times, shoot thousands and thousands of bisons (buffalos), and throw the Indians in a reservation area. The reservation area is characterize as arid (no water), no vegetations, and very hot. And the whitemen can not survive on that, yet, the Indians deed. So the Whiteman gave the American Indians blankets made of wool. Unfortunately, the supposed gilt is contaminated with cholera, and it almost wipe out the Indians from the surface of the earth.
And just like the British when they were given rights to occupy Hong kong, China,for 100 years, they introduced opium from India, to make the Chinese addicted to that drug. Here in the Philippines, just recently, a raid by PDIA (Philippine Drug Enforcement Agency), uncovered hundreds of millions worth of Shabu in Real, Quezon. And who are the foreigners caught in the raid? Two (2) Taiwanese and three (3)mainland Chinese? Imagine, these suppose to be protagonists are ganging up to make the ethnic Filipinos addict?
What compassion for the poor are you talking about? Mind you, our government is controlled by predominant ethnic Chinese. Soon, even our priests will be mostly ethnic Chinese.
Are you surprise why CBCP (Catholic Bishop Conference of the Philippines) has lost their balls? Just look at their eyes. They are Chinese!