Yellow cacophony

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In a simple yet a direct way, President Rodrigo Duterte invoked taxpayers not to be sad about paying their dues, since “money here during my term is safe.”

“I will not allow corruption. I have fired so many Cabinet members for just an infraction,” the President said.

The economic managers recently decided to push through with the second tranche of the excise tax on fuel under the Tax Reform for Acceleration and Inclusion (TRAIN) law that would impose an additional levy of P2.24 per liter on diesel and gasoline starting 1 January.

It was announced earlier that the tax increase was to be suspended after crude oil prices hit $80 per barrel which was the trigger price indicated in the TRAIN law.

The cost of oil, however, had softened enough to make economic officials call for the lined-up reforms, since assurance of funding is crucial to the massive infrastructure buildup and its effects are already being felt.

Economic managers said from a peak of close to $80 per barrel, Dubai Futures prices, which the oil industry uses as benchmark, project further decline below $60 per barrel in 2019.

“Even with the second tranche, oil product prices will be P10 lower than their peak sometime in October,” Budget Secretary Benjamin Diokno said.

Politicians, particularly of the yellow breed seeking the all-important brownie points for the elections in May next year, are dumping the blame on the TRAIN law for the recent spike in the prices of goods but which are now on the downtrend based on the November inflation data of 6 percent growth, the first decline this year and the lowest since the 5.7 percent recorded in July.

There are even efforts to bring back the discredited pork barrel system which will not be consistent with Rody’s pledge of judicious use of public funds.

The pursuit of reforms is needed since the nation used to only dream of a constant 6 percent growth rate which economists believe was necessary to reverse Filipinos’ slide to poverty. It is now a reality and a mere 6 percent growth is considered ordinary.

The Asian Development Bank (ADB) in a recent report indicated the country is in a golden age of growth which is unprecedented in the past 40 to 50 years.

The ADB, however, said with the wide array of government projects under the “Build, Build, Build” program, the challenge now is to assure implementing agencies have the absorptive capacity to roll out large and complex projects.

That capacity largely depends on the revenues that the government is capable of raising yearly.

As Rody had said, the key for sustained growth remains the competent use of public funds.
During the term of his incompetent and callous predecessor, Noynoy Aquino, underspending of public funds had limited the economy’s prospects.

Diokno said strong growth in government spendings reflects the budget reforms for the past two years under Rody.

The present poor state of infrastructure shows decades of neglect and misallocation of public resources, he added.

Resistance to cash-based budgeting, which requires that allocations be used within a year thus preventing accumulations of lump sums, indicates the rough sailing of the reform measures in Congress.

Rody, however, has shepherded his reform bills by constantly talking to members of Congress.

The legislators needed constant reminding that commuters in Metro Manila suffering from the worsening vehicle traffic and the almost daily breakdowns in the mass railway system that the former administration used as a milking cow by the yellow Liberal Party are now becoming a thing of the past.

The first tax reform package is now providing the funds to help support the aggressive government spending on infrastructure, education, health and social protection programs for the poorest of the poor.

The reform package needs to be completed through Package 2 of the TRAIN that addresses business taxation.

TRAIN 2 seeks the overhaul of the corporate tax structure, particularly the system on the grant of investment incentives.

Finance Secretary Carlos Dominguez III said defects in the investments system prevent the Philippines from attracting foreign direct investments.

Train 2 will continue to grant incentives to businesses, but the government seeks to ensure “that every peso given up as an incentive must benefit the society in the form of better jobs, faster innovation and countryside development,” according to Dominguez.

For the past 50 years, infrastructure spending average a mere 2.6 percent of gross domestic product (GDP).

“This administration ramped up spending from 5.4 percent of GDP in 2017 to 7.3 percent in 2022,” he added.

By 2022, the “Build, Build, Build” program of the Duterte administration would have ushered in the Golden Age of Infrastructure in the Philippines.

Infrastructure spending is projected to increase from the present 5.4 percent to 7.3 percent of GDP.

Stay the course, ignore the useless yellow noises.

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