Tax reform, rice tariffs top 15 Sona priorities

In Photo: President Duterte delivers his third Sona in a remarkably calm manner that masked the tension he witnessed as top ally Pantaleon Alvarez (seated, right, with Senate President Vicente Sotto III) fought for his post as Speaker just minutes before the scheduled speech of the President.

DESPITE being made to wait for more than an hour as a power struggle played out in the House of Representatives, President Duterte injected a sense of urgency in the priorities that he outlined in his third State of the Nation Address (Sona) on Monday, topping his pitch to Congress with mostly economic measures.

Among the 15 priority legislative measures which he laid out in his 48-minute speech, the President stressed the urgent passage of: rice tariffication, the second package of tax
reform law, lowering interconnection rates between telecommunications industry players, universal health care, end of contractualization, and environment protection.

The President announced he has certified as urgent the rice tariffication bill, which seeks to convert rice import caps into tariffs. It has gained urgency in recent weeks as government and affected sectors grappled with inflation, partly fueled by spikes in rice prices in the market as a result of supply problems.

Economic managers are keen on removing the quantitative restriction (QR) on rice to tame inflation, which has accelerated in recent months, with blame heaped on the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) LAW.

“We need to switch from the current quota system in importing rice to a tariff system where rice can be imported more freely. This will give us additional resources for our farmers, reduce the price of rice by up to 7 pesos per kilo, and lower inflation significantly,” Duterte said.

“I ask Congress to prioritize this crucial reform, which I have certified as urgent today,” he added.

Duterte also urged Congress to pass the second package of TRAIN, which he hopes to sign before the end of 2018.

The second package lowers corporate income taxes paid by 95 percent of businesses while providing new fiscal incentives for deserving recipients.

The President noted that this will create more jobs as more than 99 percent of businesses are micro, small and medium enterprises (MSMEs) and employ around 65 percent of workers.

“The enactment of the Package 2 is what stands between today and millions of jobs in the near future,” he said.

The President said the government has worked to lower interconnection rates between all industry players, not only to lessen the cost to customers, but also lessen the cost for incoming players. It will create a market environment that is more conducive to competition. “This is a policy which is crucial to ensure that our solutions to our telecom problems would be meaningful and lasting. The last two years of experience has taught me that the lack of consultation or insufficiency of information can at times lead to rushed judgments,” he said.

Duterte also sought a “speedy” passage of the universal healthcare bill, which he earlier certified as urgent. This provides primary care to all Filipinos, including free medicines and free healthcare.

He reported that the government’s campaign against “Endo” – the practice of ending workers’ tenure to avoid granting them benefits of permanent workers – and illegal contractualization has resulted in the regularization of more than 300,000 workers as of early July.

Although the President noted that he signed Executive Order No. 51, which sought to protect the workers’ rights to security of tenure, he admitted that there is still a need to pass a legislation to fully realize the end of contractualization.

“Read my lips. I understand this does not satisfy all sectors; I share their sentiment; I truly do. Much as I like to do the impossible, that power is not vested upon me by the Constitution. And neither will I make both ends meet even if I violate the laws to achieve that purpose. Simply, it is not part of my territory,” he said.

“That is why I add mine to their voices in asking Congress to pass legislation ending the practice of contractualization once and for all.”

Just like his second SONA, the President reiterated that environmental protection remains the government’s priority as he warned the mining industry to stop destroying the environment.

“Stop destroying watersheds, the forest and water resources. You can no longer filth our rivers,” Duterte said. “Expect reforms, radical ones. I do not intend to quarrel with anybody but for as long as I have said you will just have to contend with me. I expect you to do
your part for national development starting now.”

Other priorities listed by the President in his speech were his war on drugs, HIS fight against corruption, the Bangsamoro Organic Law, an independent foreign policy including sustained protection of Overseas Filipino Workers and assertion of claim in the West Philippine Sea, the setting up of the coconut farmers’ trust fund, enforcement of laws of local government units, the National Land Use Act and the creation of a department of national disaster management.

He also issued a directive for all intelligence agencies to unmask rice cartels and hoarders.

This year’s Sona delivery, at 48 minutes – running from 5:21 and ending at 6:09pm –  was the shortest delivered by the President so far.

The speech, which had almost 5,000 words was also shorter compared to the previous SONA speeches of the President.

Recommendations

Local analysts welcomed the President’s pronouncement on his administration’s economic priorities, adding that a change in leadership at the House of Representatives will help achieve his goals.

Economist Calixto V. Chikiamco agreed with the President that the amendment of Republic Act (RA) 8178, or the Agricultural Tariffication Act, will help ease inflation and generate revenues for farmers.

However, Chikiamco said the second package of the Tax Reform for Acceleration and Inclusion Act (TRAIN) needs to be amended before it is passed.

“Rice tariffication is needed to lower rice prices, reduce corruption and generate revenues to help rice farmers,” he said.

“(The) election of GMA (Pampanga Representative Gloria Macapagal-Arroyo) as Speaker augurs well for economic reform legislation,” Chikiamco added.

However, he said one of the priorities set by the President–ending contractualization–was “unrealistic.” He said it may be better to amend the Labor Code to lengthen the probationary period to two years from six months.

Also, he said the President and lawmakers should focus more on amending the Public Service Act to enable foreign businessmen to invest in the country’s telco and transport industries.

University of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa said the President did address major issues for Filipinos — jobs, income, and production.

Unlike Chikiamco, Terosa supported the President’s strong stance on ending contractualization.

He also supported the President’s “stern warning” against economic saboteurs who unduly increase commodity prices.

“To a certain extent I’m happy with these economic priorities because they address the three major issues faced by a typical growing economy, namely jobs, income, and production,” Terosa said.

“The will to promote sustainable production and use of resources are among the foundations of a more secure and sustainable economic trajectory,” he added.

Ateneo Center for Economic Research and Development (ACERD) Director Alvin P. Ang said the President’s SONA was “okay”, especially when it came to the TRAIN and his vow to continue the fight against corruption.

However, Ang said he would have wished that the President include in his priorities efforts to improve coordination among government agencies. This, Ang said, will help the Duterte administration achieve its goals of ending contractualization and promoting Universal Healthcare.

Labor: mixed reactions

The Sona drew mixed reactions from workers, who stated it was both “gratifying” and filled with “lies.”

Migrant advocate Susan Ople commended Duterte for “speaking highly” of OFWs, when he said ensuring their protection is a priority of the government, when forging its foreign policies.

“I am sure this was noted by the diplomatic community and the heads of our posts. Assistance to nationals and the prevention of abuses against our OFWs are clearly hallmarks of our foreign policy under President Duterte,” Ople told Business Mirror in an SMS.

In his Sona, Duterte appealed to countries, which serve as hosts for OFWs, to become “dependable partners” of the government in protect the rights of OFWs.

Ople, however, pointed out she hoped Duterte also gave an update on his campaign promise to create a new department specifically to handle OFW affairs.

Militant labor group Bukluran ng Manggagawang Pilipino was not pleased with what it deemed Duterte’s weak resolve in ending widespread contractualization.

Duterte reiterated in his SONA that he lacks the mandate to realize the demands of labor groups to issue a new policy to stop contractual employment.

“By saying that ending contractualization is ‘not part of my territory,’ this self-proclaimed ‘worker of government’ is lying through his teeth. Article 106 of the Labor Code grants to the DOLE Secretary – a mere alter-ego of the president – the power to prohibit contractualization schemes in order to protect labor rights and welfare,” BMP said in a statement.

BMP also belittled the Executive Order 51 issued by Duterte, which reiterated government policies against illegal forms of contractualization.

“His Executive Order 51 is not even a palliative to the scourge of contractualization, it did not change anything. The regime of cheap and docile labor remains. Duterte does not have political will to end endo for it goes against the interests of capitalists and foreign investors,” BMP said.

Lastly, BMP also hit the Tax Reform for Acceleration and Inclusion (TRAIN) law, which Duterte said helps the government fund its infrastructure program.

“Contrary to his statement that TRAIN is for sustainable growth, the Duterte tax reform is for sustained inflation. High prices are not caused by unjust profiteering but by onerous taxation. Tax reform for businesses, even for SMEs (small and medium enterprises), is atrocious to the workers who are burdened more by consumption taxes,” BMP said.

With reports from Cai U. Ordinario, Samuel P, Medenilla and Pearl Anne M. Gumapos, Intern

State of the Nation Address of Rodrigo Roa Duterte President of the Philippines to the Congress of the Philippines

 

Image Credits: Alysa Salen

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Bernadette D. Nicolas currently covers Malacanang, Consultative Committee tasked to review 1987 Constitution, Department of Budget and Management and Philippine Competition Commission. She has more than 2 years experience of working with a multiplatform media group before transferring to BusinessMirror in February 2018. She earned her Journalism degree at University of Santo Tomas in 2014.

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