OF SUBSTANCE AND SPIRIT Diwa C. Guinigundo He declared it was his duty to deliver the State of the Nation Address (SONA) last Monday, July 25. No doubt aware of both domestic and external challenges shaping the times and the seasons, he assured the nation finding solution will be a continuing business of his administration. Ferdinand R. Marcos, Jr., the 17th president of the Republic, announced the economic goals of his government to be consistent with the principles of “coherence of strategies, policy discipline and fiscal sustainability:” Economic targets

• Growth: 6.5-7.5 percent, 2022; 6.5-8 percent, 2023-2028
• Poverty reduction: Nine percent by 2028
• Fiscal deficit to GDP ratio: Three percent by 2028
• NG debt to GDP ratio: Less than 60 percent by 2025
• Per capita US dollar gross national income: $4,256 enough to achieve upper middle-income status, 2024

What are these numbers to the man on the street? Not a big deal unless he sees and feels that the pandemic curse is ended. Without vaccination, people cannot travel or report for work. If the virus resurges, and the economy is locked down, he would lose his job again. The SONA means nothing more than a rhetoric of quotable quotes he heard before unless more jobs are available, that working abroad is more of an option than dictated by need. SONA to the man on the street should translate into more beds in the hospitals, more classrooms in the schools, and better public transport. Government becomes relevant to him if power and water utilities are accessible to both the gated villagers and those along the railroad tracks. There could be no better proof that SONA is a meaningful annual exercise than his wage that wields the power to buy food for him and his family, send his children to school, allow them to occasionally eat out in one of those fast-food chains and of course maintain even a rented space. We don’t think these expectations of the man on the street should even be described as aspirational. The government ought to be an enabler. SONA becomes relevant when it leads to democratizing opportunities. Otherwise, the man on the street is alienated from the mainstream and he joins the others in pro-people’s causes. If SONA works, there would be no need to put up pro-government rallies to drown advocacies expressed in the parliament of the streets. How does the SONA intend to do just what the man on the street expects the government to do for him and for everybody else? It was correct for the President to have begun the SONA with his aspiration for high, more sustainable and inclusive, economic growth. We need growth to create jobs for the working class. We need growth to raise revenues, borrow less and reduce future debt burden. The targets to reduce both fiscal deficit and debt to GDP ratio to acceptable levels are more than optics. If growth is sustainable and no one is left behind, poverty could be reduced to single digit of nine percent. There is some basis for the Philippines to reach upper middle-income status by 2024. But there are some aspects of the SONA that worry us. We find it strange that revenue as a percent of GDP looks below par. The Medium-Term Fiscal Program 2022-2028 envisions it to reach 15.2 percent in 2022 to only 17.6 percent in 2028. In fact, the average ratio of 15.4 percent from 2022 to 2024 is so modest that it would even fall below the 15.7 percent average ratio during the two-year pandemic when the Philippines was into recession. We don’t see the contribution of sound fiscal management. Pursuing the previous tax reforms under the Duterte administration, improving real property valuation and simplifying financial taxation are good but aiming for high growth and addressing the economic scars of the pandemic will require more than these. Extending credit and financial assistance to the agricultural sector entails no small amount of public money. While sensible, allowing one-year moratorium on farmers’ land payment on both interest and principal as well as outright condonation of farmers’ debt would also be foregoing several tens of billion pesos. President Marcos would also like to build more health centers and public hospitals. He would also like to replicate specialty hospitals for the children, heart, kidney and lungs in the regions. A Center for Disease Control and Prevention and a vaccine institute are also proposed to be established. Upgrading “Build, Build, Build” to “Build Better More” means more money will be required in the next six years. Taxation does not have to be regressive, that is, taxing those who can least afford it. Taxing digital business and transactions sounds good because this area is untaxed but this will have to be balanced with the vision of making digitalization more pervasive as an instrument of inclusive growth. Taxing sin products actually offers a better source of funding because neither cigarette nor alcohol is good for the health. Taxing wealth among the wealthy would just be a small drop in the bucket. The other plank of fiscal management is ensuring public money is spent and spent well. We know very well that reports of the Commission on Audit document irregularities in public spending. Yet the SONA seems to have left out crucial issues of governance such as adherence to rule of law and fighting corruption. Previous studies indicate that the Philippines loses between ₱100 billion to ₱200 billion annually to corruption. Uncollected tax obligations amount to hundreds of billions of pesos. The culture of impunity ought to be eliminated. We need to hear his SONA again at about this time next year.