From Peace History
While President Duterte likes to claim that his administration adheres to an independent foreign policy, it appears that his major programs such as the packages of tax reforms and the planned Charter change (Cha-cha) are actually pushed by US and other foreign interests.

IBON noted that the tax reforms and Cha-cha are among the key policy reforms long lobbied for by US business groups with active support from American aid agencies. It cited the US’s Partnership for Growth (PFG) initiative, an aid program participated in and coordinated by the US Agency for International Development (USAID), State Department, Millennium Challenge Corp. (MCC) and other US agencies as well as the World Bank, International Monetary Fund (IMF) and various UN bodies.

Part of the PFG implementation is The Arangkada Philippines Project (TAPP) of the USAID and the American Chamber of Commerce (AmCham) through the Joint Foreign Chamber of Commerce (JFCC). Under the TAPP, the JFCC has produced Legislation Policy Briefs that identified broad recommendations for Congress and the Executive.

Among hundreds of specific policy proposals of the JFCC are comprehensive tax reforms that will raise excise tax on petroleum products, impose sin taxes (alcohol, cigarettes, and tobacco products), as well as broaden the base of the value-added tax (VAT), while reducing the corporate income tax. It also pushed for the lifting of constitutional restrictions on foreign investments through Charter change (Cha-cha).

IBON noted that the US remains a major player in the Philippine economy. In the past decade (2006 to 2016), American businesses have invested US$4.12 billion or 10.3% of the total foreign direct investment (FDI) that flowed into the domestic economy, the second biggest among all foreign investors. The US is also the second largest market for products from the Philippines, accounting for US$89.22 billion or 15.6% of the country’s total exports in the past 10 years.

Both the pro-business tax reforms of the Duterte administration and Cha-cha for greater economic liberalization will further benefit US corporations. This includes lower corporate income tax that will be offset by heavier indirect taxes at the expense of the public, and the opening up of additional sectors of the economy for US investments and profits, said IBON.

Illustration by Jose Erwin Mallare

The rich and other higher income groups will have larger take home pay than previously estimated under the new tax law, while the poor will still bear the brunt of paying higher taxes, said research group IBON. IBON said that the highest earning 40% or about 9.1 million households will have even more money in their pockets under the recently passed Tax Reform For Acceleration and Inclusion (TRAIN) Law compared to the original Department of Finance (DOF) proposal.

Using July 2017 data from the DOF on the first year impact of TRAIN, IBON previously estimated that the richest 10% earning an average of Php115,428 monthly will have an additional Php33,795 annually.  But IBON’s computations based on the latest December 2017 DOF data shows that the richest 10%, now estimated by the DOF to be earning an average of Php104,170 monthly, will have an additional Php90,793 annually.

This includes how a chief executive officer (CEO) among the top 0.1% of families already earning Php494,471 monthly will take home an extra Php88,568 annually. This is a reversal of the previous estimate that a CEO among the top 0.1% earning Php706,017 would lose Php20,694, said the group. Middle income and lower-middle families meanwhile take home an additional Php7,880 to Php24,343 under TRAIN.

Meanwhile, IBON said that the poorest 60% of Filipino households or 13.7 million households will continue to have less money under the new tax law, though figures based on the more recent data are slightly lower than previously estimated. Under TRAIN in 2018, every rice farmer (first and lowest income decile) will lose Php646 annually; every farm worker (second income decile) will lose Php937; every construction worker (third income decile) will lose Php1,141; every private school teacher (fourth income decile) will lose Php1,363; every bookkeeper (fifth income decile) will lose Php1,591; and Php1,887 will be taken from every machine tool operator (sixth income decile).

IBON said that contrary to government claims, majority of Filipinos will not benefit from income tax exemptions from TRAIN. About 15.2 million families who already do not pay income tax because they are minimum wage earners or informal sector workers with erratic incomes will not have any income tax gains. Yet while not getting increased take home pay, they will have to endure price hikes as a direct or indirect effect of higher consumption taxes.

The proposed cash transfers to supposedly minimize the tax impact on poor households are an admission by the DOF that the poor will be burdened with higher spending. Yet these are only temporary and will only be given during the first three years while oil excise taxes continue to increase. The poor will no longer receive the temporary cash transfers after 2020 yet have the permanent burden of higher prices on their basic goods and services.

IBON said that the TRAIN Law only confirms the Duterte administration’s tendency  towards anti-poor and pro-rich policies. ###

Photo by Ariel Opera for NDBC News

Petroleum excise taxes proven to be very inflationary in the past

The administration persistently downplays certain increases in the prices of goods and services, research group IBON’s Executive Director Sonny Africa said. This is dishonest and insensitive to the burden that the Tax Reform for Acceleration and Inclusion (TRAIN) imposes on the poor to avoid higher taxes on the rich, said Africa. He maintained that the Duterte administration’s TRAIN law which took effect at the start of the year will increase prices, and possibly even dampen economic growth.

The Department of Trade and Industry (DTI), Department of Finance (DOF), Bangko Sentral ng Pilipinas (BSP), and National Economic and Development Authority (NEDA) have all understated the impact of TRAIN on the prices of goods and services, noted IBON. The DTI said that the effect on prices of prime commodities would be very small or minimal. The DOF insists that inflation will remain manageable in 2018. For the same period the BSP forecasts that inflation will just be at 3.4 percent. NEDA meanwhile has declared that inflation will be stable despite TRAIN.

The orchestrated statements are meant to diffuse justified criticism of the anti-poor and pro-rich tax reform, Africa said. “The additional petroleum product excise taxes for instance cannot but have a domino effect on the prices of basic commodities and other goods and services”, he said. He added that TRAIN proponents correctly point out how petroleum excise taxes were last raised over two decades ago. “They should also highlight how this was very inflationary,” said Africa.

The Republic Act (RA) 8184 of 1996 increased taxes on gasoline by Php1.83-2.83 per liter, diesel by Php1.18, and kerosene by Php0.10, among other oil products. “This was certainly a factor in driving inflation up from 8.0% in 1995 to 9.1% in 1996.”, said Africa. Similarly, RA 9337 of 2005 expanded the coverage of the value-added tax (VAT) to include petroleum products. Despite excise taxes on diesel and kerosene being taken away, inflation rose from 6.0% in 2004 to 7.6% in 2005.

The higher oil taxes also likely contributed to dampening economic growth as one major factor among many factors underlying economic growth rates, according to Africa. Growth in gross domestic product (GDP) slowed from 5.8% in 1996 to 5.2% in 1997, combining with the Asian financial crisis in the latter part of the year. Growth also moderated from 6.7% in 2004 to 4.8% in 2005 and 5.2% in 2006.

Africa pointed out that oil excise tax increases under TRAIN are however much higher than before. From current levels, the tax on gasoline will increase by Php2.65 per liter in 2018, Php4.65 in 2019, and Php5.65 in 2020; the tax on diesel by Php2.50, Php4.50, and Php6; and on kerosene by Php3, Php4, and Php5. “There is even a new tax on LPG of Php1 per kilogram in 2018, Php2 in 2019, and Php3 in 2020. Administration economic managers are then being dishonest in being dismissive about the inflationary impact of TRAIN,” he said.

“They are also being insensitive,” said Africa. “The administration’s economic managers and other TRAIN proponents should stop harping on the windfall from personal income tax cuts of, at most, six to seven million taxpayers. It’s about time for them to become more transparent and upfront about the negative impact of TRAIN on the poorest 15 million Filipino families. These are tens of millions of Filipinos who do not get any personal income tax cuts but will pay higher prices for the goods and services they consume from already very low incomes,” he stressed.

Africa also said that government’s harping on the cash transfers for the country’s poorest families is an indirect admission that the TRAIN’s taxes do put an additional burden on them. “But these transfers are only temporary for the first three years while even higher taxes are imposed.” According to Africa, the relief ends after the third year but the greater TRAIN tax burdens are permanent. ###

From ylbnoel.wordpress.com

Admin’s avid push for market-driven measures will run over the poor majority

The new year seems to usher in more difficulties for Filipinos in accessing basic goods, public utilities, and services amid government’s exclusionary policies, research group IBON said. The market-driven policies that have been prioritized by the Duterte government such as the Tax Reform for Acceleration and Inclusion (TRAIN), Build, Build, Build, amendments to the Public Services Act, and easing restrictions on foreign ownership and participation will hugely benefit only oligarchs, foreign investors and their allies in the bureaucracy, said the group.

IBON said that the newly-enacted first package of TRAIN relieves the rich by lowering personal income, estate, and donor taxes. The second package, which Congress is set to tackle soon, will propose to lower corporate income taxes as well. But the poorest 10 million Filipino families whose incomes fall way below the family living wage of Php1,039 per day will soon bear the brunt of TRAIN-triggered higher prices of food and goods,and service fees, said the group. It noted that TRAIN’s measly Php200 monthly social protection is slated only for 2018 and will be insufficient to cushion the impact of added taxes on oil and sweetened beverages, electricity, and shipping.

In terms of government’s infrastructure program that will be funded by foreign and private sector loans, public-private partnerships (PPPs), and unsolicited proposals, IBON added, contracts stipulate that the State will ensure interest and risk guarantee payments to the lenders and corporations for largely transportation infrastructure. But on the other hand, the public will be obliged by the ‘user pays principle’ with the likes of higher toll fees and more expensive fares.

IBON also said that proposed amendments to the Public Service Act will open up services such as transportation and telecommunications to foreign ownership. This will purportedly lower the prices of these services due to competition. Based on experience, however, monopolies or only a few companies instead prevailed and dictated the prices due to the absence of strong and genuine government regulation that upholds public interest. Proposed amendments will also allow ‘public utilities’ such as water and power service providers to treat corporate income tax as an expense. According to IBON, this will mean higher rates as consumers will be made to shoulder the companies’ tax obligations.

Relatedly, said IBON, more foreign corporations may be enticed to do business in the Philippines upon the modification of the foreign investment negative list (FINL) even before foreign restrictions could be removed through a more cumbersome Charter change. The FINL is a mechanism to limit foreign ownership in and protect Philippine industries, stressed IBON. However, the Duterte administration’s proposed modification will allow foreigners to further enroach on local professions, construction, retail trade, businesses, media, and education. Once government steps aside from its duty to provide goods and services, people’s access and capacity to afford these will be left at the mercy of corporations.

The Duterte government’s prioritization of the above-mentioned measures shows its determination in completely opening up the Philippine economy to big business and foreign corporate plunder at the cost of people’s welfare and national sovereignty, IBON said. This year onward, these State-facilitated neoliberal policies will further attack the people’s lives and livelihood,  and undermine the public’s rightful control and access of the country’s  resources. These social and economic woes will most likely increasingly face public scrutiny and opposition for now and the years to come, said IBON.


Season’s greetings of hope and solidarity in the continuing quest for Peace! — From the IBON Family | 2017

A typhoon survivor decorates a Christmas tree amid the rubble of destroyed houses in Tacloban, Philippines, Dec. 17. Typhoon Haiyan reduced almost everything in its path to rubble when it swept ashore in the central Philippines Nov. 8, killing more than 6,000 people, and displacing more than 4 million. (CNS photo/Erik De Castro, Reuters) (Dec 17, 2013)

Research group IBON said that contrary to its claims, the Duterte administration affirmed its apathy towards the low-income majority of Filipinos upon its signing of the Tax Reform for Acceleration and Inclusion (TRAIN). By signing the tax program into law, government has proven its determination to collect funds for its purportedly pro-poor centerpiece programs but at the expense of millions of poor Filipinos who will have to cope with TRAIN-triggered price hikes, said the group.

President Duterte, upon inking TRAIN, said that it would be his administration’s best Christmas gift to the Filipino people. Following deliberations on proposed amendments to the Department of Finance’s (DOF) original package, Congress ratified last week a final version of the first package of the government’s Comprehensive Tax Reform Program (CTRP).

According to IBON, government has in fact grossly exaggerated how lower income taxes will benefit Filipinos, and downplayed how the country’s poorest will be burdened by higher prices on basic goods and services without getting any tax exemptions. The overwhelming majority of Filipinos in fact do not get any income tax benefits from TRAIN, the group said.

“TRAIN is a scourge, not a gift, to the people,” IBON executive director Sonny Africa said. “Though Filipino families certainly deserve income tax cuts to cope with rising costs of living, it is misleading to claim ‘6.8 million’ benefiting from TRAIN because this figure includes millions of minimum wage earners already exempted by law,” said Africa. He added that if anything, the DOF, House and Senate have even proposed to remove this minimum wage exemption.

Africa also said that 15.2 million Filipino families not getting any increases in take-home pay will have to deal with more expensive food and drinks, cooking expenses, jeepney and bus fares, electricity and other goods and services next year. Higher taxes will be imposed on sugar sweetened drinks; oil products including liquid petroleum gas (LPG), kerosene, diesel, and gasoline among others; and coal. Broadening the VAT base will only worsen the burden on poor Filipinos, Africa said.

Africa also noted that the biggest chunks of flagship infrastructure projects for which the administration claims to have earmarked most of the collection from TRAIN are concentrated in already economically-active regions such as the Metro Manila, Southern Tagalog and Central Luzon. That the poorest regions like the Autonomous Region of Muslim Mindanao (ARMM) and Caraga Administrative Region (CAR) are getting only small portions of the Build Build Build projects indicates that the Duterte administration marginalizes poor Filipinos, said Africa. The projected cost of Build Build Build is at Php8-9 trillion over five years with projects to involve China and Japan, as well as known oligarchs such as the Ayalas, Cojuangco and the Pangilinan group.

Photo from GMA
On the day that Pres Duterte signs the tax reform package, IBON underscores how TRAIN will entail price hikes on various goods and services beyond Christmas.
Photo from GMA
Photo from GMA
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From Northern Dispatch

Research group IBON said that recently-released employment figures show that the jobs crisis is worsening under the Duterte administration’s neoliberal agenda, despite reported fast economic growth. The group said, there were jobs lost and an increase in the number of unemployed, primarily due to the over one million job losses in agriculture. These latest figures indicate that the government market-driven economic policies are failing to bring about the genuine long-term development of the domestic economy that could create sustainable livelihoods.

The Philippine Statistics Authority (PSA) reported 5% unemployment, 95% employment and 15.9% underemployment rates in October 2017. IBON said however that there were 134,000 jobs lost and 148,000 more unemployed this year compared to the same period last year, although the number of underemployed declined by 893,000. The employment rate could also be distorted considering government labor force definitions discount some 2-3 million workers not in the labor force.

The agriculture sector suffered 1.4 million in job losses which primarily contributed to the rise in the number of unemployed in October 2017. IBON noted that in the same period in the past five years, agriculture jobs have been declining, except for a slight uptick in 2016. Those employed in the sector decreased from 12.1 million in 2013, to 11.8 million in 2015; to 10.4 million this year.

The recent agriculture job losses were offset by increases in employed persons in the services and industry sector by 944,000 and 381,000, respectively. Under services, job increases primarily occurred in public administration and defense, compulsory social security (299,000), followed by transport and storage (215,000), and wholesale and retail trade (191,000). Manufacturing (239,000) and construction (136,000) accounted for the bulk of additional employed in the industry sector.

IBON said that these job losses and higher number of unemployed indicates that the country’s fast economic growth remains exclusionary. It also underscores the unsoundness of the neoliberal economic policies forwarded by the Duterte administration, which primarily serve big local and foreign business interests. 

The significant decline in agricultural work is an example of the government’s neoliberal policies failure, as the sector remains backward and vulnerable to weather conditions and disasters, said the group. Government neglect and lack of support for domestic production, and its prioritization of pro-big business interests, such as corporate plantations, ecotourism complexes, mining, and large dams, among others, have affected rural livelihoods. The four-year non-recovery of agriculture in provinces stricken by supertyphoon Yolanda leaving farms vulnerable to repeated calamities also illustrates government’s long-term neglect of the vital sector.

IBON said that long-term sustainable employment will only be created by veering away from the same old neoliberal policies and working towards true long-term development of domestic agriculture and industries. ### 

From travelblog.org

In a Senate hearing following jeepney drivers and operators’ cancellation of a nationwide transport strike, research group IBON said that public utilities vehicle (PUV) modernization should be socially just. The group pointed out that the Duterte administration should be able afford to undertake jeepney modernization without jeopardizing jeepney drivers’ livelihood and commuters’ access to this mode of transportation. The bottomline is for the government to not relegate the duty of providing this important public service to the profit-seeking big corporate sector, IBON said.

A Senate hearing on transportation concerns was convened by Sen. Grace Poe, chairperson of the Committee on Public Services. Come January 2018, the Duterte administration is slated to implement PUV modernization, which involves replacing jeepneys with ‘compliant units’ such as Euro-4, electric, solar or hybrid vehicles.

In a position paper, IBON said that PUV modernization should be under a comprehensive mass transport plan of a State-run, nationalized mass transport system that ensuresthe welfare of the riding public and overall social and economic benefits. The group however noted that the Department of Transportation (DOTr) is rushing implementation of the program without the prerequisites of route rationalization and undergoing a pilot phase. The group also queried on DOTr assumptions that (1) switching to ‘compliant’ vehicles will result in increased drivers/ operators’ revenues, (2) Euro IV vehicles are fuel efficient; and that (3) ‘compliant’ vehicles have zero maintenance cost.

The following are IBON’s recommendations for socially just PUV modernization:

  • A palit jeepney program wherein the government subsidizes the cost of acquiring new units, allowing small drivers/ operators to trade in their current jeepneys for a new unit. It starts with (a) government’s transparent audit of all registered PUJs to identify units for rehabilitation; (b) central procurement of all replacement units at a scaled down price; (c) distribution of jeepneys to existing associations/ cooperatives as collective managers and operators; (d) reasonable payment mechanisms
  • Phased implementation which sources funds from the realignment of budget items in the General Appropriations Act. Government could procure the first 70,000 of over 230,000 units, for instance, in 2018, by realigning some Php61.805 billion from redundant Special Purpose Funds, unobligated amounts from agencies such as the DOTr, Department of Trade and Investments, Department of Interior and Local Government and the Department of Finance; and subisidies for the Comprehensive Automotive Resurgence Strategy (CARS)
  • Government as investor in jeepney modernization and partner of driver/ small operator cooperatives to limit franchises to genuine cooperatives or associations, ensure support services, employ a regular maintainance program at no or minimal cost to the cooperative, and capacitate cooperatives in traffic education and skills building
  • Industrial policy towards the development of a truly domestic PUV manufacturing

IBON also said that for commuters to not be hounded by fare hikes, government should craft a fare-setting policy for PUVs and other mass transport that is not market-based but founded on the principle that public transportation is a service that has to be reliable, safe and affordable. Government should also not employ the users pay policy/ cost recovery that it applies to public utilities such as mass transport, IBON said.

The group stressed that public transport should be modernized but not in a way that displaces livelihoods, and compromises commuters in favor of narrow big business interests.###


IBON Features – Contempt for human rights is fast becoming a Duterte administration trademark. Over 10,000 people, mostly poor, have reportedly been executed in its war against drugs. Extrajudicial killings, harassment and intimidation, illegal arrests and forced evacuation of communities have continued and recently started escalating. The victims include many opposing the government’s anti-people policies. Authoritarianism is growing astride neoliberalism.

Big business- and foreign investor-biased neoliberal policies cause economy-wide violations of people’s economic, social and cultural rights while creating prosperity for a few. This will only worsen with the neoliberal tax reforms and wholesale liberalization being pushed by the Duterte government.

Alarming state

Recent rapid economic growth has not resulted in the attainment of the rights to work, to just wages, to land, to adequate standard of living, and to health, housing and education – in many instances the situation has become even worse. Promises to end contractualization and of free land distribution, education and housing are still unmet. The abrupt termination of peace talks with the National Democratic Front of the Philippines (NDFP) betrays the government’s lack of interest in, among others, the basic social and economic reforms that the country needs.

Some 11.5 million Filipinos are jobless or underemployed – counting the unemployed that official statistics have stopped reporting but still excluding the over 10 million forced to find work abroad. Of those employed, 31.6 million or nearly eight out of 10 are in the informal sector with poor quality work. Some 5,800 Filipinos leave the country every day to work overseas. As it is, the latest labor force survey data for July 2017 reported 784,000 jobs lost from the same period last year including a million agricultural jobs lost that were not replaced by new jobs elsewhere in the economy.

Around 22 million Filipinos live in extreme poverty at Php60 per person or much less per day, and almost two-thirds of the population live on just Php125 or less per day. Inequality persists — the combined wealth of the 15 wealthiest individuals amounting to Php2.6 trillion is equivalent to the combined income of the 77 million poorest Filipinos. Wages meanwhile are still less than half the family living wage.

Landlessness is still widespread, Even among supposed agrarian reform beneficiaries, some three out of four are unable to amortize the land supposedly awarded them. Farmers and farmworkers are evicted from their lands by corporate plantations, ecotourism projects, and real estate developers. This imperils not only farmers’ livelihoods but also the nation’s food security. Farmers that have dared to collectively occupy and cultivate land have been attacked by landlords and the state’s armed forces.

Homeless urban poor groups have claimed idle government housing but still grapple with spotty health services, and water and power supply. Their leaders meanwhile face arrest for the boldness of their organizations’ assertion of the right to housing. In the Visayas, tens of thousands of Typhoon Yolanda survivors have been in temporary shelters for four years with their former communities declared no-dwelling zones yet transformed into tourism spots. In Mindanao, a few thousand Marawi evacuees have been promised free housing even as thousands more are prevented from returning to their war-ravaged homes by business-led rehabilitation cordons.

Community-built schools in Lumad and other remote areas where the government is absent have enabled thousands of indigenous children and their families to avail of free and relevant education. Yet the Duterte administration continually threatens them with many already harassed, bombed and forcibly evacuated by the military and paramilitary groups. Teachers and community leaders have already been killed.

Elitist priorities

The Duterte administration’s social and economic policies as found in its Philippine Development Plan (PDP) 2017-2022 and priority legislation remain trapped in obsolete neoliberalism. These will only worsen the jobs crisis, undermine decent wages, further erode social services and public utilities, and prevent the country from benefiting from its rich natural resources. At the same time they will further entrench the hold of local and foreign big businesses on Filipinos’ economic life.

The Tax Reform for Acceleration and Inclusion (TRAIN) program will strain the budgets of poor households who will have to pay more for their marketing, transport fares and utilities because of new taxes on oil products, sweetened beverages, coal and others. The country’s more well-off families on the other hand will be relieved of income, estate, donor and other taxes; even corporate income taxes are planned to be cut. 

Among the biggest beneficiaries of TRAIN revenues will be big local and foreign investors participating in or otherwise using the big-ticket infrastructure projects in the administration’s “Build, Build, Build” program. These projects include large dams feared to displace some 20,000 indigenous peoples’ families across the nation.

Proposed amendments to the Public Service Law and to the Build-Operate-Transfer Law seek to completely turn over public services and utilities such as telecommunications, transportation, water and electricity to the private sector including to foreign investors. More than ever, these will become commodities to profit from rather than vital services that all Filipinos have a right to. Their affordability and accessibility will be compromised.

The Duterte administration’s drive to completely liberalize the economy for foreign investment is especially alarming. The nationalist economic provisions of the 1987 Constitution will be made ineffectual under the proposed Federalism charter. This removes the last legal measure for the country to assert its sovereignty over its national patrimony and economy. As it is, the administration will already take initial steps towards this in its upcoming revision of the foreign investments negative list (FINL).

The anti-development repercussions of federalism also cannot be underestimated. Pres. Duterte’s federalism initiative will drive local governments to compete with each other in a race to the bottom to attract investors through cheaper labor, lower business taxes and other conditions favorable to profit-seeking at the expense of social and welfare considerations.

The state is obliged to respect, protect and fulfill human rights. The Duterte administration’s neoliberal policies do the opposite and violate the rights of tens of millions of Filipinos. As with all its other rights violations, it should be held accountable for these attacks on the Filipino people’s economic, social and cultural rights.###

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