Budget and Taxes

* My column in  BusinessWorld  last June 27. --------------- The developed countries of North America and Europe continue to experience record-high inflation rates and their interest rates follow the upward trend hoping that the measure will help cool down prices. High inflation discourages more household and corporate consumption, which pulls down overall GDP. And this pulls the developed world into a possible situation of stagflation — stagnant growth with high inflation — this year. INFLATION, INTEREST RATES AND ENERGY COMMODITIES The US and UK inflation rates of 8.6% and 9.1% respectively in May were their highest levels in 40 years. Germany’s 7.9%, also this May, was the highest since 1973-74. And US 10-year bonds reached 3.48% two weeks ago, the highest since February 2011. European rates this month are the highest since 2014. Behind these high inflation rates are high energy and electricity prices, high fertilizer and food prices. The TTF-EU (Title Transfer Facility-EU)...

* My article in  BusinessWorld  last June 20. ----------------- Last week, there were a number of developments in these four subjects or sectors: taxes, cement, electricity and land transportation. DINNER TALK Last Monday, June 13, I organized a dinner with incoming Finance Secretary Benjamin Diokno and Budget Secretary Amenah Pangandaman, and I gathered a few fellow columnists in BusinessWorld plus the newspaper’s editor-in-chief, Willy Reyes. I could have brought more columnists from the paper but Sir Ben wanted a small group. Ben Diokno was my teacher twice at the UP School of Economics (UPSE): when I was an undergrad in 1984 and again when I took my graduate studies Program in Development Economics (PDE) in 1997. Mina was my classmate in PDE batch 33 so maybe they found it difficult to decline my request. Among the topics we talked about that evening were the tax reforms done by the Duterte administration, infrastructure spending, agriculture modernization, reducing the de...

SSS clarifies: Not a subsidy for operations June 8, 2022 | 5:49 pm https://www.bworldonline.com/opinion/2022/06/08/453611/sss-clarifies-not-a-subsidy-for-operations/ Letter To The Editor WE WANT to thank you for your support in helping the Social Security System (SSS) further raise the awareness of our members and the general public through the publication of stories about SSS. However, we would like to clarify one of the statements in the column article by Bienvenido S. Oplas, Jr. entitled, “Public finance and UPSE’s PDE batch 33,” published in BusinessWorld today, June 7, 2022 ( https://bit.ly/Oplas060722 ). Mr. Oplas discussed the “three elephants in the room” in public finance in the article. One of which is the endless subsidies to government corporations and financial institutions. He cited SSS as an example after the national government gave SSS P51 billion in 2020. We want to inform him that the P51 billion given to SSS in 2020 was not a subsidy for the agency’s operation. The ...

* My article in  BusinessWorld  last June 6.  -------------- The Philippines’ public debt stock continues to increase big time, from P8.22 trillion (actual + guaranteed) in 2019 to P10.25 trillion in 2020, P12.15 trillion in 2021, and P13.18 trillion in April 2022. This is due to huge borrowings — from a monthly average of P73 billion in 2019 to P208 billion in 2020, P188 billion in 2021, and P291 billion in January-April 2022. (See last week’s column:  https://bit.ly/Oplas053122 .) There are many elephants in the room when it comes to public spending, big issues and problems that people try to avoid discussing as they can cause discomfort to many other people. The article last week identified one — that while millions of people in the private sector lost their businesses and jobs during the lockdowns 2020-2021, the number of government personnel, from national down to barangay levels, stayed intact and their salaries, allowances, and bonuses continued to be given. T...

* My column in  BusinessWorld  last May 30.  ------------------ During the  BusinessWorld  Virtual Economic Forum (BWVEF2022) last week (May 25-26), net-zero, decarbonization, and more renewable energy (RE) were discussed on Day 1. These concepts and aspirations are related to the new fad in finance — the environmental and social governance (ESG) scheme where more investments in RE and under-investments in fossil fuels are promoted. ESG AND ITS IMPACT ON AGRICULTURE COMMODITIES Among the ESG-related points made by some speakers at the BWVEF2022 were: 1.) Offshore wind power as part of climate solution, made by Torbjørn Kirkeby-Garstad of Scatec, 2.) more incentives for green buildings and net-zero, made by Raymond Rufino of NEO, and, 3.) small businesses have to be enabled to pursue net zero, made by Maria Yolanda Crisanto of Globe Telecom. See also some recent articles on ESG in  BusinessWorld : 1. “Accounting considerations for the oil and gas sector as r...

 * My article in  BusinessWorld  last May 9. ------------ By the time this column is printed and posted online, the elections would have ended and counting should have started. I want to share some things related to the campaign rallies, then some post-election economic scenarios. THE LENI-KIKO MITING DE AVANCE I attended the last campaign sortie of the Leni Robredo-Kiko Pangilinan tandem on Ayala Ave., Makati City on Saturday, May 7. I was there for about 10 hours — afternoon to midnight — and here are some of my observations. 1. It was a huge crowd — estimates range from 700,000 to one million people. Ayala is long, eight-lanes wide, with wide sidewalks, and several wide perpendicular streets, which were all filled with people. 2. There were lots of freebies — from many private volunteer groups giving free medical assistance to free ice cream, taho (street food of tofu, syrup, and sago pearls), bread, cookies, and candies, to plastic fans and even free condoms. But ther...

* My article in  BusinessWorld  last April 11, 2022. ------------- Last week, on April 5, I attended the Philippine Economic Briefing (PEB) at the PICC, a sort of valedictory address by the Duterte administration led by Secretary of Finance Carlos G. Dominguez. The Opening Remarks were given by Executive Secretary Salvador C. Medialdea, then the main report, “The Ship of State Has Been Masterfully Steered,” delivered by Mr. Dominguez, followed by “Monetary, External, and Financial Sector Updates” by Governor of the Bangko Sentral ng Pilipinas (BSP) Benjamin E. Diokno. It was followed by a press conference with seven officials in the panel: Mr. Dominguez, Mr. Diokno, Trade and Industry Secretary Ramon M. Lopez, Agriculture Secretary William D. Dar, Tourism Secretary Bernadette T. Romulo-Puyat, NEDA (National Economic and Development Authority) Undersecretary Rose Edillon, and Transportation Undersecretary Giovanni Z. Lopez. Mr. Dominguez emphasized in his report that the “Duter...

* My article in  BusinessWorld , February 14, 2022.  -------------- I wrote a recent paper for the Albert del Rosario Institute (Stratbase-ADRi), “Assessment of the Philippines’ Sin Tax laws: Have they delivered the expected revenues?” The quick answer is “Yes.” The primary purpose of the sin tax hike is to raise more money for the government, secondarily to reduce consumption of so-called “sin products” like tobacco, alcohol, and sugar-sweetened beverages (SSB). And there is a big question mark if the second objective was really attained. RISING SIN TAX REVENUES Tobacco tax revenues doubled from P33 billion in 2012 to P72 billion in 2013, tripled by 2015, quadrupled by 2017, and nearly quintupled by 2019 and 2020. The same trend of persistent increase follows in alcohol tax revenues, but not as fast as tobacco revenues. The P24 billion level in 2012 became double by 2016 and triple by 2019. From one of the tables (Table 15) of the paper, I showed these numbers (Table 1). As a...

* My column in  BusinessWorld , December 13, 2021. ------------- The Philippines’ growth scenario has somehow turned optimistic, with the belief that we can probably return to the 2019 level of Gross Domestic Product (GDP, the monetary value of all finished goods and services made within a country during a specific period) of P19.38 trillion by around the third quarter 2022. GDP size contracted to only P17.53 trillion in 2020. Such optimism is not reflected in the government’s fiscal position because it continues to deteriorate. For instance, government borrowings per month on average were P73 billion in 2019, then shot up to P208 billion in 2020, and P247 billion until October 2021. More borrowings, higher public debt today means higher taxes tomorrow. In 2017, the budget deficit (revenues lower than expenditures) was only P351 billion and government raised many excise taxes. Oil and coal products were among those taxed higher (see Table 1). Tax pressure will begin in 2022 as the ...

Reposting two papers published in BusinessWorld same day, same page. The image below is not part of my rejoinder, I just added it here. Image source,  https://www.bloomberg.org/public-health/reducing-tobacco-use/ ------------------ Letter to the Editor (10/31/21) October 31, 2021  https://www.bworldonline.com/letter-to-the-editor-10-31-21/ (This letter refers to Bienvenido Oplas, Jr.’s column “High deaths, low births, reduced smoking and the WHO,” which came out on Oct.  25;   https://www.bworldonline.com/high-deaths-low-births-reduced-smoking-and-the-who/ . — Ed.) Dear Editor, I write to commend you for adding an editorial note about the safety of COVID-19 vaccines despite Mr. Oplas’s claims that the increase in recorded deaths may have been due to the COVID vaccinations. There are other inaccuracies in his statements regarding non-communicable diseases (NCD). Oplas says deaths from NCD have flatlined “even as people are getting wealthier and consume more proce...

* My article in  BusinessWorld , October 4, 2021. Keeping taxes of tobacco products high and raising them is a favorite policy measure of governments, health NGOs, and other sectors. The twin goals are: a.) to reduce smoking incidence by making cigarette prices higher, and, b.) raise revenues for government’s universal healthcare (UHC) program. TOBACCO TAX RATES UNDER FOUR LAWS Even two decades ago tobacco tax rates were already high. Under Republic Act (RA) 9334 of 2004, cigarettes with retail prices of P6.50 to P10/pack were taxed at P11-P12/pack. RA 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law of 2017 was implemented in 2018 but by July 2019, Congress created another law, RA 11346, that further raised the tax rates. The P37.50/pack by 2020 under RA 10963 became P45/pack under RA 11346. The P40/pack by 2022 became P55/pack (see Table 1).  RA 9334 has four tiers of taxes, RA 10351 has two tiers, and many smokers shift to lower-taxed tiers affecting gover...