Sa totoo lang–as a matter of fact

Change is coming! That was how the candidacy of now President Duterte was heralded. And he did promise that the country will "feel the difference in six months”: suppress crime, stop corruption in government, end illegal labor contractualization, and hike infrastructure spending up to 7% of GDP. His promises were translated into a 10-point program that serves as the guidepost of his administration.

What has happened since then? Have his promises been fulfilled?

On the second year of the Duterte administration, the Movement for Good Governance (MGG) of which I am a part, looked at facts to find out the answers.

0. Fight crime and corruption. The good news is that the crime index fell by 21.8%, from 128,730 in 2016 to 100,668 in 2017 except for homicide cases which rose by 14.6% in 2017.

However, the fall in the crime index is not consistent with the country’s slide in the Rule of Law Index. From being ranked at 70 in 2016, the Philippines is now placed at 88 out of 113 countries in 2017. The Philippines had the most significant drop in constraints in government powers, fundamental rights, order and security, and criminal justice. The Philippines is 6th from the bottom with respect to order and security.

1. Maintain macro, trade, trade, fiscal and monetary policies. Our GDP grew by 6.7% in 2017 which was touted as the 3rd fastest growing in Asia, the fastest in ASEAN and the 2nd worldwide. Was this fake news or inaccurate reporting?

Six countries in Asia grew faster than the Philippines in 2017. We are the 7th fastest growing economy in Asia, not the third, not the fastest in the ASEAN, and certainly, not the 2nd worldwide. Nepal, 7.5% Bangladesh, 7.3% Lao PDR, 6.9% China, 6.9% Cambodia, 6.8% Vietnam, 6.8% Philippines, 6.7% Source: The World Bank There is much to say If we look at the quality of our growth. Agriculture grew by a pittance, 1.47%. The fisheries sector pulled the sector down with a 4.1% decline in output. This is one of the reasons why 21.6 % of our people suffer from poverty. Three (3) out of 5 of our poor work in agriculture and 40% of households headed by fishermen are poor.

Price stability has not been maintained with an average inflation rate of 5.2% in June reaching 7.7% in ARMM.

We are not doing well in the external sector. Trade deficit widened to US$ 15.77 billion from January to May this year from US$ 10.16 billion in the same period last year. Despite an increasing exchange rate, exports continuously dropped.

2. Progressive tax reform, effective tax collection, and tax indexation. The administration counts the passage of TRAIN 1 as one of its milestones. Credit rating agencies cannot agree more. TRAIN reduced the income tax burden of taxpayers by increasing personal exemption to 1250, 000. Government succeeded in increasing the excise tax rates on petroleum products which remained "frozen" since 1997.

Government compensated for the revenues it lost from the imposition of the soft drink tax, increase in documentary taxes, as well as tax rate increases on fuel including those consumed by the poor, e.g kerosene. They hit the poor the hardest. They who do not benefit from the reduction in income tax rates are now faced with increasing prices. Government tries hard to explain that TRAIN is not responsible for the spike in inflation. But it cannot escape from the responsibility of not managing its effective implementation. It was ill-timed. The rules were not clear. Adequate training for tax functionaries and public education were missing. To top it all, the small subsidy of 1200.00 per month for the poorest 50% was not implemented on time. As of May, only 1/2 of the intended transfers had been distributed.

The reduction in the estate tax of from 20% to 6% was part of TRAIN. The estate tax is intended to let the poor share from transfers of wealth from one generation to another. Certainly, there are major problems in its implementation. But these can be addressed through improvements in tax administration and not by making the tax system favour the wealthy.

More can be said on how the TRAIN is skewed to benefit the affluent. The rate on cheap vehicles was increased from 2% to 4% but the tax rate on more expensive ones was lowered from 60% to 20%. And why an exemption for pickups? To make Nissan Frontier, Toyota Hi-lux, and Ford Ranger more affordable for the poor? Talk about progressive taxation! (To be continued)

mguevara@synergeia.org.ph