October 15, Quezon City-They say when the times are hard, tighten your belt; when the blanket is short, learn to bend. But amid continuous increases in commodity prices, are these "coping mechanisms" still viable to respond to the poor families' needs?
INCITEGov, together with the Eastern Visayas Network of NGOs and POs (EVNet) and in partnership with the Ateneo Center for Economic Research and Development, convened a forum on the TRAIN law to examine its impact on the poor. TRAIN stands for Tax Reform Inclusion and Acceleration Act. It is the initial package of the Comprehensive Tax Reform Program (CTRP) signed into law by President Rodrigo Duterte on December 19, 2017. His reform includes packages that make changes in taxation concerning the personal income tax, estate tax, value added tax (VAT), DST and the excise tax of petroleum products, automobiles, sweetened beverages, cosmetic procedures, coal, mining, and tobacco.
In her opening remarks, INCITEGov Chair Teresita Quintos-Deles emphasized that the solution to the complex societal problems affecting our society today cannot proceed from overly-simplistic and superficial responses, which are, in fact, anti-poor. Such as, saying that the poor are poor because they are lazy. Such as, telling the poor that they should "stop being crybabies," that they should eat bukbok rice, and simply learn to "tighten their belts." She thanked the co-organizers, Dean Mapa, and the panel of reactors for being willing to generously share their knowledge and research findings for a more informed discussion on the issue.
Dr. Cristina Bautista, Chair of the Ateneo Economics Department, noted: “Nakakangawit ang laging mamaluktot habang natutulog. Makakahanap ba tayo ng paraan para palakihin ang kumot? O makakahanap ba tayo ng paraan para mabawasan ang ngawit?” (To fit one’s self in a small blanket is uncomfortable. Can we find a way to make the blanket larger, or at least to reduce the discomfort?After all, the bottomline of economic policy is to make people better off, she added.
Dean Mapa, the forum’s main presenter, explained why the poor suffered most from increasing prices brought about by the law. Based on his study, the poor was actually experiencing it at 8.12% which was 1.58% more than the headline inflation of 6.7% in September 2018. He further noted that food items account for 61% of their consumption – and food inflation hit 9.7% in September 2018. He further explained that the current cash transfer to the poor per month is not enough. For him, the economic team underestimated the amount of subsidy the poorest 30 percent need, due to the inaccurate assumption that a poor family has only five members.
Dean Mapa recommended that the government should stop its imposition of additional taxes if social protection services were not delivered to the poor. He said there was already an unanticipated VAT of P1.35 per liter from diesel’s average price of P43.6 per liter from January to October.
“From the revenue side, the suspension of P2 will not really hurt the DOF. Unless we fix the social protection angle, the best call is to suspend it now,” he added. The P2-per-liter excise on fuel is scheduled to go into effect in January 2019.
PhD Candidate JC Punongbayan of the UP Department of Economics explained why inflation is giving the Filipinos the strongest hit at this particular time, using government data as basis of analysis. Inflation rate as of August has been the highest in 9.4 years and the highest in all of ASEAN. He notes that it is most important to arrest inflation immediately, by halting TRAIN’s petroleum hikes next year, among other measures. More importantly, he stressed the need to manage people’s expectation by regaining their trust and confidence.
Dr. Philip Arnold Tuano of the Ateneo Economics Department and a Board Member of INCITEGov, expressed that more rigor and more thought should have been put in the making of this law – such as, considering its differentiated impact across sectors and in the various regions over time.
Ms. Analiza Natalio, Vice President of the SNPP-Samahan ng Nagkakaisang Pamilya ng Pantawid, explained how she as a mother of an extended household has been trying her best to cope with the ever-rising prices of basic commodities. "Inuubos kaming mahihirap sa EJK, uubusin pa rin kami sa gutom," she said. (They finish the poor through extra-judicial killings, and now they do it by making us hungry.)
Ms. Corazon Juliano-Soliman, INCITEGov's Lead for Social Protection, drew the participants to a buzz session to address these questions: What do you suggest are the two most important actions that you want government to do, and the two most important actions that the private sector can do?
The buzz sessions led to this shared assessment: Revenue generation took on a higher priority than social protection. There has been a failure in coordination, and there has been a failure in the timing of implementation. There was obviously a lack of rigor in the crafting of this law, therefore the need to go back to the assumptions more carefully. Meantime, it will be worth considering these proposals: suspend the implementation of TRAIN law (particularly excise tax on fuel); address the inefficiencies in government; and most importantly, expedite the implementation of CCT and ensure appropriate and full implementation of UCT, in addition to ensuring full funding for social protection programs, education, and health.
Ms. Soliman further explained that in February, the DOF granted unconditional cash transfers (UCT) of P2,400 for 2018 to each of some 7.4 million households, 4.4 million of which are existing beneficiaries under the Pantawid Pamilyang Pilipino Program. But urban poor leaders claimed that the government’s P6 subsidy per day under the UCT was not enough to deal with the inflationary impact of the new tax law.
The open forum highlighted the social protection measures that should have been undertaken alongside tax reforms, and what the legislators and policy makers can still and must do before the next round of legislated price increases and excise tax increase take effect in January next year.
Nearly a hundred participants attended the forum, consisting of representatives from the academe and students, think tanks, people’s organizations, NGOs, business, and the media. #