Autopilot, or headless, mode of governance?
Published Nov 18, 2021 12:04 am
OF SUBSTANCE AND SPIRIT
Diwa C. Guinigundo
Atty. Howard Calleja of 1Sambayan described the political circus prior to Nov. 15 as cirque du freak, circus of freaks. Trying to stretch their flexibility before finalizing their political plan, some politicians actually subvert the spirit of our electoral law by using this provision on substitution as free poll survey. The media have been effectively coopted as they tried to connect the dots and craft the narratives. They keep public interest alive.
But as the concerned artists of the Philippines correctly observed: “It is insignificant to pin down whether this clash between the ruling families is a plot in a script or an actual effect of factionalism within the Duterte clique. What is important is that the people are aware that both sides are fueled by a similar interest: To stay in power.”
The Philippines is left to run on “autopilot” mode. But unlike human brains which switch off when they are familiar with an activity to perform, and perform it with more accuracy, governments need leaders to govern.
Unfortunately, we have seen recent evidence that headless governance could be costly. For instance, the House Committee on Ways and Means decided to temporarily suspend or reduce the excise tax on some fuel products for six months. The Committee proposed to scrap the excise taxes on diesel, kerosene, and liquefied petroleum gas (LPG). Excise tax on low-octane gasoline will be reduced while premium gasoline will remain taxed at current rates.
Congressman Joey Salceda rationalized this policy reversal in terms of its supposed immediate relief for Filipino families specifically affected by the recent run-up in fuel prices. Congress itself declared that the cost to the National Government (NG) is not peanuts, it’s about ₱45 billion.
The House should know that diesel and LPG are consumed not only by the poor. Those who enjoy their commute on diesel-powered luxury SUVs are also big consumers. Rich and poor families alike rely on LPG for cooking. Rural dwellers continue to cook using charcoal and firewood. Those who can afford to switch to low-octane gasoline will benefit from the tax reduction, and they by no means qualify as daily wage earners.
As a whole, the government appears headless. This proposal is not supported by the Department of Finance (DOF). DOF explained that removing the excise taxes “would benefit buyers who never needed price cuts in the first place.” NG’s protestation is therefore not anti-rich, but the more fundamental flaw of the House proposal is that it would invalidate the progress it has achieved in levelling the playing field.
The tax relief was shown to boost the disposable income of the richest 10 percent by some 0.63 percent to 0.82 percent in 2022. However, the disposable income of the poorest 50 percent of the population will only increase by 0.34 percent to 0.45 percent.
To manage the rising global oil prices, it is best to keep the excise taxes on fuel products. NG needs every peso of tax revenue to fund both health measures and economic recovery. The budget deficit had reached ₱1.1 trillion through September 2021, an annual increase of nearly 30 percent. This is around 8.3 percent of our GDP.
Keeping the tax is imperative because revenue collection had declined by some 16.3 percent as of end-September 2021. Doing away with the excise tax means NG would be foregoing an internal estimate of ₱38 billion with minimal impact on inflation at 0.1 percent.
On a full-year basis, this could easily translate into ₱147 billion loss in both excise tax and VAT. This House measure would invariably force NG to borrow in order to maintain the same level of public spending to keep the economic momentum.
With higher oil prices, the disposable incomes of both the moneyed class and the poor have dropped. DOF’s computation demonstrates that scrapping the excise taxes would benefit the rich more than the poor. How to keep the tax policy and mitigate the collateral effect on the poor can be executed by granting time-bound and direct subsidy. The DOF was right in doing it through the distribution of cash aid to the nearly 180,000 and affected public utility drivers.
While we wrestle against this policy slippage, we should remain conscious of the pandemic. It is far from over, so we need more than the autopilot mode of governance. No less than Health Secretary Francisco Duque himself who warned yesterday that “the Philippines might end up replicating the recent surge of coronavirus disease in Europe.” A global syringe shortage is also looming. Sustained funding of vaccine procurement remains critical. If NG continues to allow various departments to park their funds with the infamous PS-DBM or PITC, the budget will continue to be vulnerable to corruption and perhaps, plunder.
We don’t need freaks to do circus out of government, or to put it into autopilot, or on a headless political journey. We need leaders who are deliberate and serious, competent and without any history of moral turpitude or bad governance. Headless chickens are good only for the kitchen.
Diwa C. Guinigundo
Atty. Howard Calleja of 1Sambayan described the political circus prior to Nov. 15 as cirque du freak, circus of freaks. Trying to stretch their flexibility before finalizing their political plan, some politicians actually subvert the spirit of our electoral law by using this provision on substitution as free poll survey. The media have been effectively coopted as they tried to connect the dots and craft the narratives. They keep public interest alive.
But as the concerned artists of the Philippines correctly observed: “It is insignificant to pin down whether this clash between the ruling families is a plot in a script or an actual effect of factionalism within the Duterte clique. What is important is that the people are aware that both sides are fueled by a similar interest: To stay in power.”
The Philippines is left to run on “autopilot” mode. But unlike human brains which switch off when they are familiar with an activity to perform, and perform it with more accuracy, governments need leaders to govern.
Unfortunately, we have seen recent evidence that headless governance could be costly. For instance, the House Committee on Ways and Means decided to temporarily suspend or reduce the excise tax on some fuel products for six months. The Committee proposed to scrap the excise taxes on diesel, kerosene, and liquefied petroleum gas (LPG). Excise tax on low-octane gasoline will be reduced while premium gasoline will remain taxed at current rates.
Congressman Joey Salceda rationalized this policy reversal in terms of its supposed immediate relief for Filipino families specifically affected by the recent run-up in fuel prices. Congress itself declared that the cost to the National Government (NG) is not peanuts, it’s about ₱45 billion.
The House should know that diesel and LPG are consumed not only by the poor. Those who enjoy their commute on diesel-powered luxury SUVs are also big consumers. Rich and poor families alike rely on LPG for cooking. Rural dwellers continue to cook using charcoal and firewood. Those who can afford to switch to low-octane gasoline will benefit from the tax reduction, and they by no means qualify as daily wage earners.
As a whole, the government appears headless. This proposal is not supported by the Department of Finance (DOF). DOF explained that removing the excise taxes “would benefit buyers who never needed price cuts in the first place.” NG’s protestation is therefore not anti-rich, but the more fundamental flaw of the House proposal is that it would invalidate the progress it has achieved in levelling the playing field.
The tax relief was shown to boost the disposable income of the richest 10 percent by some 0.63 percent to 0.82 percent in 2022. However, the disposable income of the poorest 50 percent of the population will only increase by 0.34 percent to 0.45 percent.
To manage the rising global oil prices, it is best to keep the excise taxes on fuel products. NG needs every peso of tax revenue to fund both health measures and economic recovery. The budget deficit had reached ₱1.1 trillion through September 2021, an annual increase of nearly 30 percent. This is around 8.3 percent of our GDP.
Keeping the tax is imperative because revenue collection had declined by some 16.3 percent as of end-September 2021. Doing away with the excise tax means NG would be foregoing an internal estimate of ₱38 billion with minimal impact on inflation at 0.1 percent.
On a full-year basis, this could easily translate into ₱147 billion loss in both excise tax and VAT. This House measure would invariably force NG to borrow in order to maintain the same level of public spending to keep the economic momentum.
With higher oil prices, the disposable incomes of both the moneyed class and the poor have dropped. DOF’s computation demonstrates that scrapping the excise taxes would benefit the rich more than the poor. How to keep the tax policy and mitigate the collateral effect on the poor can be executed by granting time-bound and direct subsidy. The DOF was right in doing it through the distribution of cash aid to the nearly 180,000 and affected public utility drivers.
While we wrestle against this policy slippage, we should remain conscious of the pandemic. It is far from over, so we need more than the autopilot mode of governance. No less than Health Secretary Francisco Duque himself who warned yesterday that “the Philippines might end up replicating the recent surge of coronavirus disease in Europe.” A global syringe shortage is also looming. Sustained funding of vaccine procurement remains critical. If NG continues to allow various departments to park their funds with the infamous PS-DBM or PITC, the budget will continue to be vulnerable to corruption and perhaps, plunder.
We don’t need freaks to do circus out of government, or to put it into autopilot, or on a headless political journey. We need leaders who are deliberate and serious, competent and without any history of moral turpitude or bad governance. Headless chickens are good only for the kitchen.