Has The Middle Class Gone Richer?

The President, in her State of the Nation Address (SONA) last Monday, said she is neither scrapping, suspending, nor lessening the 12% VAT on oil and electricity.   

In so many words, Mrs. Arroyo repeated her often made argument that tinkering with the VAT now would only benefit the rich and hurt the poor. 

“If the VAT on power and oil would be scrapped, it would benefit the rich who consume 84% of oil and 90% of electricity while hurting the poor who will lose P80 billion for programs,” Mrs. Arroyo said. 

This is a clever argument and I must say the President really has some very good speech writers in her employ. It is like saying that, faced with the dilemma of having to choose which to save, the poor or the rich, she is opting to side with the poor. 

But, forgive my stupidity, but whatever happened to people like me who in all honesty belong to neither? Whatever happened to people like me who belong to the thinning ranks of the middle class? 

While it is understandable to buck demands from various sectors to rethink and retool the VAT imposed on fuel considering the P18 billion windfall government expects to collect from VAT on oil this year, this is nevertheless an obvious attempt to put a populist spin on an unpopular issue.  

We really have to hand it to Mrs. Arroyo. She makes getting screwed from behind sound as if it is thoroughly enjoyable. 

The 2006 Family Income and Expenditures Survey (FIES) contains a breakdown of the total oil consumption by income bracket. The poor’s share is 5.4 percent.  The rich and upper middle class consume 40.3.  The lower middle class has the biggest share of oil consumed, accounting for 54.3 percent.   

Listening to Mrs. Arroyo last Monday, however, you get to wonder: has the lower middle class’ fortunes, from 2006 to 2008, suddenly improved to the extent that they now can be classified as “rich”? 

She said further that, faced with the twin global crises on food and fuel, she has had to make unpopular but right choices.

“Thank God for the guts not to flinch in the face of tough choices. Thank Congress for the intelligence and thank the taxpayers for footing the bill…Take the VAT away and you and I abdicate our responsibility as leaders and pull the rug from under our present and future progress,” she said.

But the truth is the President, far from making “tough” choices, has been taking the easy way out. Instead of going after tax cheats, ridding the BIR and Customs of corruption, and generally improving tax collection, she has instead relied on the VAT to plug shortfalls on collection.

In fact, some critics of government, aside from those favoring the scrapping or the temporary suspension of the VAT, have been calling on the reduction of the VAT rate for all products from 12 percent to 10 percent.   

The Philippine Finance Institute of the Philippines (PFIP), headed by former Finance Secretary Bobby de Ocampo, believes that the loss of revenue from reducing the VAT rate for all goods can be compensated by tax reforms that are in fact long overdue—tax administration, the indexation of the excise tax on sin products, and the rationalization of fiscal incentives. 
 
The PFIP further argues that “the increase in the VAT rate from 10 to 12 percent (in 2006) was an exigency measure when the threat of an unmanageable budgetary deficit threatened fiscal stability.”  

In other words, the increase from 10% to 12% should have only been temporary in the first place and that government should have improved its tax administration in the meantime.  

“We are afraid that continuous reliance on exigency measures would ease the pressure on collecting agencies to perform their responsibilities with utmost integrity and competence…. Exigency measures would continuously mask the fiscal problems that we have in tax evasion, avoidance, corruption, and proliferation of incentives,” the PFIP statement said. 

But Mrs. Arroyo obviously had other things to consider last Monday and we are stuck with a 12% VAT on oil. I only wish she had us in mind.  

But then again, that’s just me.

A Damaged Culture Redux

I recently came upon the article A Damaged Culture by the American journalist James Fallows. I remember reading the article, which Mr. Fallows wrote for the Atlantic Monthly in 1987, back in high school. It was required reading but I doubt if I read it as I can not recall what it was about prior to reading it again 20-odd years later.  

I remember the article generated a lot of controversy since nationalistic sentiments were especially high one year after EDSA. I do not recall reading it (much less understanding what it was about if I had) but I distinctly recall feeling aggrieved, even at 15, as if the author was dishing out a personal insult to me in particular. No doubt many others shared the sentiment; a 15-year old, after all, merely apes the reactions of his elders. 

But reading the article now I find sadly that Mr. Fallows was in large part accurate on his reading of Philippine affairs. Substitute Mrs. Arroyo’s name for Mrs. Aquino’s and it sounds like Mr. Fallows was writing about present realities. 

I was particularly struck by Mr. Fallows’ observation that “this is a country where the national ambition is to change your nationality.” I know this to be true—I myself have contemplated leaving many many times. In fact I must confess that I have not completely banished the thought from my mind especially since it has become increasingly difficult to make ends meet in these times of skyrocketing fuel and food prices. Like so many Filipinos, I have relatives and friends who now live in other countries, not necessarily the U.S. of A. And sometimes it just gets too tempting—perhaps life is really better elsewhere? 

But there lies the problem, as Mr. Fallows wrote and to which I completely agree.  Mr. Fallows, in writing about the Philippine elite, wrote that “there is not necessarily a commitment by the upper class to making the Philippines successful as a nation…if things get dicey, they are off with their money.”  

Today it seems this observation applies to everybody with the means and opportunity to get out. And while the middle and lower middle classes have no money to take out of the country, they nevertheless take with them a very valuable resource—their expertise and their energy.  

Granted, middle and lower class Filipinos who find work overseas regularly send a majority of their earnings home thereby helping to keep those that remain afloat (remittances from overseas Filipino workers reached a record $ 14.45 billion last year). But is this necessarily a good thing or does this only lead many to apathy with regards to how this country is run? Why reform the Comelec or why speak out against corruption? We can always go elsewhere, why fix the problems at home?  

Mr. Fallows wrote, too, that compared with other cultures, we seem unable to think of ourselves beyond the tribe, beyond the family. He wrote that unlike, say, the Japanese or the Koreans, or even the Thais, we Filipinos seem to lack a sense of national identity. Mr. Fallows likened the extent of our loyalties to the Mafia families portrayed in the Godfather—“total devotion to those within the circle, total war to those outside.” Which is why we keep on having leaders who think only of their own aggrandizement instead of working for the benefit of the whole, according to Mr. Fallows. 

Now why am I going through all these trouble for an article written 21 years ago, you might say? Precisely because things haven’t changed. A survey by the SWS early this year found that most Filipinos are pessimistic with regards to the quality of their lives improving in the near term. In another SWS survey last month, it was found that 60% of those surveyed were dissatisfied with the performance of Mrs. Arroyo.  And still another SWS survey revealed that an estimated 2.9 million families have gone hungry in the last three months alone. Yet with all these unfortunate circumstances, no widespread protests have occurred beyond those mounted by traditional critics of government. 

In ending his article, Mr. Fallows wrote “what will happen when…the culture doesn’t change and everything gets worse?” 

It has gotten much worse and apparently most of us are just thinking of leaving.

                                                         -oOo-

For XUHS Alumni: Mr. Charles Culanag, “Charcul” to his students and friends, is ill with cancer. Any support, and prayers for his recovery, will be much appreciated. For details on how to send your help, please contact Dr. Bernard Cepeda ( rebnarmd@yahoo.com ).

SONA

A year before Gloria Macapagal-Arroyo assumed the presidency from deposed President Joseph Ejercito Estrada, a hill of garbage fell over a slum community in Lupang Pangako, Payatas, Quezon City  killing 218 people and leaving 300 families homeless. 

Lupang Pangako (Promised Land) is a misnomer for the community—it is a slum inside one of Metro Manila’s largest dumpsites and most make their living scavenging for recyclable garbage. 

For her very first State of the Nation Address (SONA) on July 2001, Gloria Macapagal-Arroyo picked the tragedy of the year before to underscore how vastly different her presidency is going to be from her disgraced predecessor.  

From a pillaged economy, GMA promised to bring the country relative prosperity. From a country ravaged by a gluttonous executive, GMA promised to raise the moral standards of government and steer bias toward the disadvantaged. From a mere “promised land”, GMA vowed to bring the country into “NIC-hood,” a sort of promised land to promise fulfilled.  

A little less than two years from now GMA’s term as president will be over. By all intents and purposes the period for making transformative change is practically over. Already, the next batch of presidential hopefuls are mounting their respective campaigns for the presidency. What then has GMA got to show for it? 

Seven long years from 2001, we are again back to square one. Seven years after GMA took office, we are again looking over our shoulders, waiting for the proverbial mountain of garbage to fall over our heads. 

The prices of fuel, rice, and other basic commodities have gone amok resulting to 2.9 million Filipino families going hungry in the last three months, according to the latest SWS survey. To address this worsening crisis, government, according to Press Secretary Jesus Dureza, will continue implementing its targeted programs involving, so far, some P8 billion in subsidies.  

But all these interventions are raising questions precisely because the government of GMA is in itself plagued by an insurmountable crisis—the lack of credibility. Who can say that the so-called pro-poor programs do not fall prey to corruption?  

In the end, GMA’s legacy can be summed up in a few words—an absolute lack of integrity. Four years after the 2004 presidential polls, GMA’s credibility remains in question. Almost every big, multi-billion peso project under her administration have been tainted with allegations of corruption—IMPSA, Diosdado Macapagal Highway, ZTE-NBN, Northrail, etc. ,etc.  

Worse, GMA seems determined to use everything in her power to shield every questionable transaction from public scrutiny. No wonder a survey last December by Pulse Asia showed 42% of the people polled considered GMA “the most corrupt president in Philippine history.” 

Come Monday, July 28, GMA will again deliver her SONA. Come Monday GMA will again tell us that things are really not that bad.  

But will anybody be listening?

A Higher Standard

The good attorney Joe Pallugna wrote in a column titled “In Defense Of Bacal” that the incident involving the city councilor was “an ordinary accident that occurs everyday” and that the reason why Bacal is getting so much bad press is that he is a public official.  

The good attorney further decried all the “speculation and innuendo” that was and is being heaped on Councilor Bacal adding that “some news reporters” may “have personal reasons to twist” facts to “serve some hidden agenda.” 

Forgive me for saying this but I think the good attorney misses the point. By a mile. 

True, accidents of this nature happen frequently here as well as in other parts of the country; many other 15-year olds have died after being run over by wayward Revos.  

But does the frequency of these accidents make it any less painful for the victims’ families? The good attorney may be well versed on the nitty gritty of the law. A word of advice though: TACT. Use your dictionary, look the word up. 

Second. It is precisely because Councilor Bacal is an elected official that the incident generated so much bad press. By his own account, Councilor Bacal immediately left the scene of the accident, without bothering to bring the boy to the hospital nor even checking if the boy was still alive because he said he feared that the boy’s relatives may do him harm. After that, he hemmed and hawed, saying he did not know he hit anybody, saying this, saying that, all the while seeking the help of the powers that be. 

This behavior is perfectly understandable for ordinary people as the good attorney says.  But Councilor Bacal is no ordinary person. He is an elected official, a person with the political mandate of an entire community. He actively sought the people’s trust and gained his office with the tacit understanding that he would put the people’s interests above his own. At all times.  

Political office is not something a person discards after office hours. It is not something that people do for a living like, say, brokering stocks or raising chickens. A person, once elected into office, serves in the capacity as a public servant 24 hours a day, seven days a week. 

We entrust our lives, our destiny even, to people such as Councilor Bacal. We entrust the crafting of laws that we would have to live by– laws that dictate how much we have to set aside for taxes, where we can build our houses, what we can and can not do– to people such as Councilor Bacal. 

It is therefore natural to expect better behavior from people such as Councilor Bacal. It is therefore natural, and right, that such people as Councilor Bacal are made to answer to a higher standard.

Biting the Bullet

Why is DTI Regional Director Ma. Eliza Pabillore complaining about the results of  the   Philippine Cities Competitiveness Ranking Project (PCCRP), the flagship research undertaking of the Asian Institute of Management Policy Center’s City Competitiveness Program?

 

The AIM policy center came out last July 4, 2008 with the results of its 2007 study which ranked Cagayan de Oro 11^th in terms of business competitiveness compared to 25 other medium-sized cities.

 

Cagayan de Oro shared the spot with Leyte’s Tacloban City.

 

Ms Pabillore said she “treat(s) the survey with a grain of salt” adding “the ranking does not reflect the realities on the ground.”

 

Ms Pabillore said, quoting from news reports, she could not understand why the city fared poorly when figures available with DTI and the local government showed that the city is enjoying a booming economy, has a good business environment, and local officials are responsive to business needs.

 

“Basically, we failed on perception-based surveys but fared well on indicators that are supported with hard data,” Ms Pabillore added.

 

As a citizen of this city I share Ms Pabillore’s dismay with the way the study turned out for us. We like to think of ourselves as a lucky to be living here, long considered as one of the top cities of Mindanao.

 

But I think we ought to take study as it is— plain. No seasonings, no salt.

 

On its own, the data from the DTI Regional Office may show us doing well in the same areas covered by the PCCRP. The local economy is so robust that Ayala Land is at present investing in Cagayan de Oro, according to Ms Pabillore.

 

But this misses the point. The study, as I understand it, was made precisely to measure how well we are doing in relation to other cities. The study ranks the overall competitiveness of Philippine urban centers based on the following drivers of competitiveness: costs of doing business, dynamism of the local economy, human resources and training, infrastructure, responsiveness of the local government to business sector’s needs, and quality of life.

 

The study, to quote from the Policy Center’s primer, merely “constructs a benchmarking method that will aid individual cities in measuring their level of competitiveness in relation to other cities.”

 

So what is there to fret about? After all, we do need to know who we are competing against and how we are standing up to the competition. We can not afford to be complacent, secure in our mistaken belief that we are a cut above the rest.

 

And it is not as if we are finding ourselves suddenly at the bottom of the dung heap. In 2003, Cagayan de Oro was ranked 3^rd among 13 medium-sized cities surveyed for business competitiveness. In 2005 we found ourselves in the 8^th position among 15 medium-sized cities.

 

So besides stating the obvious, what the heck?

 

Instead of sulking in the corner, we should grab this golden opportunity to finally get our act together. Instead of saying “well if they had only done this, if only they had done that” we should be thinking of ways to finally arrest our slide to the abyss; we should be thinking of ways to beat the competition.

 

To illustrate just how badly we are misunderstanding this, let us take the example of Iloilo City. Iloilo City was among the top awardees of 2005 but was kept out of the top seven performers last year.

 

Iloilo City was ranked 8^th (eighth by golly and they feel bad about it).

 

But instead of trying to question the results, Iloilo City Mayor Jerry Trenas is immediately calling for a round table discussion to analyze and learn from the PCCRP survey in preparation for next year.

 

This on top of the city’s efforts to rebuild after the devastation caused by Typhoon Frank.

 

So now what do we do? 

 

Now we ought to bite the bullet, do as they are doing in typhoon-ravaged Iloilo City, and begin thinking like winners.

 

 

The Champion and his Heart

Everybody said the fight was a mismatch and it truly was. Even right from the very beginning, Manny Pacquiao was landing his punches at will and it was clear that there was no way David Diaz could keep up with the Filipino just as Freddie Roach said. And just as Roach said, you knew in the middle of the fight that it would take a miracle for Pacquiao to get beat; you knew it was just a matter of time before Pacquiao lands that one punch that would enshrine him among boxing’s greatest .

 

It was a mismatch, a fight so lopsided in the Pacman’s favor that it almost looked like he was the champion defending his title and Daiz was the challenger. But there is no doubt. It was a fight.

 

It was a fight because David Diaz, despite being the lesser fighter, kept on fighting. His nose got broken in the second round; his brow got cut up so badly in the fourth that it eventually colored his shorts pink.  

 

He was said to be spitting and sneezing blood in his corner between rounds. He was so savagely beaten that, when the fight was over, he said he thought Freddie Roach was right there in the ring with Pacquiao ganging up on him.  

 

But he never stopped. He never clinched the way beaten fighters do, hanging to their opponents to keep from doing any more fighting. He did not resort to dirty tricks. Other fighters, when faced with such daunting odds, would dance away and stay way out of range. But Diaz stayed right there in front of Pacquiao, taking the punishment in a vain attempt to sneak in one of his own punches.  

 

It truly was a brave effort, a display of true grit and big heart. Of course in the end grit and heart is never enough to defeat a fighter such as Pacquiao, pound for pound one the best in the world of boxing today, if not the best.

 

As for Pacquiao, Recah Trinidad was right in saying that the fight was Pacquiao’s greatest moment. Upon seeing Diaz down on the blood-stained canvass, knocked-out and, to borrow Trinidad’s words, convulsing on the floor, his first instinct was not to savor his complete victory. He went to the neutral corner with concern clearly discernable from his face. And when the referee signaled the end of the fight, he went to the fallen Diaz and tugged at Diaz’s hand.

 

It was a rare display of humanity, of compassion, in a sport known for its viciousness.

 

There is an unforgettable picture of Muhammad Ali in his prime, standing over the fallen Sonny Liston. The picture depicts Ali, then at the height of his tremendous powers as a boxer, shoulders square, feet firmly planted over conquered ground, glaring over a fallen foe.

 

By contrast, if there is going to be a picture for the ages depicting Pacquiao in his prime, I am willing to bet that that frame showing Pacquiao bending over Diaz, tugging at Diaz’s hand, would be the one.

 

(AP Photo/Eric Jamison)