Will is sorely missing
With almost three million Filipinos unemployed, according to the latest figures, the hardship on households will worsen.
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With almost three million Filipinos unemployed, according to the latest figures, the hardship on households will worsen.
Due to the corruption scandal, the economy has weakened as uncertainty pervades, prompting households to pull back on spending, and the Middle East crisis has worsened it.
Caught in an already weak position, and with the government’s tentative responses, a collapse is imminent in a prolonged war.
Indicators were already weak even before the Middle East conflict began.
Last year, instead of a targeted 5.5-percent gross domestic product (GDP) growth, which had already been reduced, the economy expanded a disappointing 4.4 percent.
Adding the effects of the Middle East war, economists are now looking at a growth that may even be lower than 4 percent, and a worst-case scenario would make it hard to achieve a 2-percent GDP expansion.
With almost three million Filipinos unemployed, according to the latest figures, the hardship on households will worsen.
Due to the backlash against the flood control racket, which made Filipinos realize that their government was operating like a syndicate out to rob them blind, defenses of the economy against price shocks are very limited.
An economist pointed to the lack of a concrete energy policy, and the measures implemented to address high energy prices are mostly reactionary.
“If prices rise, we simply appeal to the oil companies, asking them to stagger the increases, raise prices gradually instead of all at once,” said retired Asian Institute of Management professor and economist Emmanuel Leyco.
“We are unable to implement truly effective measures to curb the impact of rising petroleum prices. Other countries have policy instruments or tools — such as price ceilings or subsidies,” he noted.
Subsidies and assistance programs, which are key responses to the economic turmoil, have minimal effect in alleviating the hardship of Filipino families.
If high prices continue, the minimum wage earners, those whose income is just enough to survive, will suffer the most.
A strong will is now demanded of the Marcos administration to end its waffling over suspending the excise tax on petroleum and to consider removing the value-added tax on fuel as well.
Even if Congress approves the emergency powers bill, the Palace is looking at only reducing the excise tax instead of totally suspending it.
Oil products and electricity were exempt from VAT until 31 October 2005, when the expanded VAT law initiated by the current Executive Secretary, Ralph Recto, explicitly removed the exclusions.
Now, as petroleum prices rise, government VAT collections increase. The excise tax is fixed for a particular product, which means an automatic P10 reduction in gasoline prices if it is removed.
Removing the excise tax and VAT would reduce government revenues, but it is hard to justify to the public who have been bombarded with the awareness that, in past years, billions have been lost to elected officials pocketing the people’s money.
The poor automatically contribute through taxes on products and their earnings, but not the crooks in government who cart away the money all for themselves.
A fair warning from experts is that if consumers cannot buy, the economy will stall, leading to a recession.
Leadership, which is required to overcome the challenges posed by a war that may drag on, is in short supply.
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