Presidential bets on taxes, infra and the charter
MANILA, Philippines – After President Benigno Aquino III hailed economic growth under his watch, how will the next Philippine leader steer business and industry?
The 4 main presidential contenders – Senator Miriam Defensor Santiago, Vice President Jejomar Binay, former interior secretary Manuel “Mar” Roxas II, and Senator Grace Poe – laid out their economic programs as they faced businessmen at a forum of the Philippine Business Conference and Expo at the Marriott Hotel on Tuesday, October 27.
The candidates delivered speeches and answered questions on proposed laws to reduce income and corporate taxes, addressing the Philippines' infrastructure gap, and liberalizing the economy. The presidential bets were also asked about issues specific to their campaign that cast doubt on their competence for the top government post.
Initially meant as a debate, the event ended up as a one-on-one forum after Binay asked that the format be changed. Poe initially begged off from the forum but showed up in the afternoon, and apologized for what she called a “misunderstanding” and “miscommunication” involving her schedule.
The Philippine Chamber of Commerce and Industries (PCCI) organized the event, with journalist Coco Alcuaz of the International Business Times as moderator.
Where do the candidates stand on key economic issues? Here are their responses:
LOWERING INCOME, CORPORATE TAXES
Alcuaz asked the candidates whether or not they support the bill of Senator Juan Edgardo “Sonny” Angara and Marikina Representative Miro Quimbo to compress the net taxable income brackets, and to lower tax rates, especially for low and middle-income earners. (READ: Is the Filipino middle class over-taxed?)
- Santiago: Reform and overhaul the tax system within 6 months of the start of the next administration. Better tax administration will finance the construction of major public infrastructure projects. The senator also supports proposals to update the Customs Modernization and Tariffs Act.
She said: “Malacañang must stop meddling with the Bureau of Customs (BOC). Corruption in the BOC will cease only if it is not tolerated by public officials.”
- Binay: He “fully supports” the Angara and Quimbo bill.
He said, “We are the second highest [in the region] in income tax. You are depriving our fellow Filipinos of money that they can use.”
- Roxas: The ruling Liberal Party (LP)’s standard-bearer said he is “always” open to reducing income taxes but called for a “very, very sober” and “non-populist” discussion of the proposed measure sans “the heat of the political battle of the elections.”
Roxas earlier said those calling for the reduction of income taxes should also be mindful of the government services that could be cut as a result. (READ: Roxas on lower taxes: But what programs will suffer?)
He added in a chance interview with reporters: “Kasi kung papogihan lang ito, huwag na tayo mag-income tax, di ba (If you’re after winning a popularity contest, let’s just scrap taxes altogether, right)?”
- Poe: The independent candidate called for the “re-classification” of tax brackets in the country, pointing out that even if Philippine rates are among the highest, “our government services still have to be improved.”
She also disagreed with Roxas’ argument that cutting taxes could slash government services.
“From 2011 until the present, we have about P600 billion in unspent fund in the government and reducing taxes will only take away about P30 billion, so when they say what programs we have to cut, we don’t even have to cut programs, we just have to be more efficient in being able to roll out our projects so that more opportunities will be created,” she said.
The Philippines' outdated, dilapidated and congested airports, ports, bridges and roads hamper economic growth. Candidates faced questions on how they intend to address the problem, and their views on the Aquino administration's Public-Private Partnership Program (PPP).
- Santiago: Both the Arroyo and Aquino governments are responsible for the poor state of public infrastructure. A Santiago presidency will set aside 5% of resources for infrastructure so the Philippines can “catch up” with its Southeast Asian neighbors.
Santiago's infrastructure projects include:
- A modern, international airport
- An entirely new railway system from Manila to Sorsogon
- A modern, integrated urban transit system in Metro Manila with lines reaching urban communities in Bulacan, Rizal, Cavite and Laguna
- One mixed-use government center (with adjacent residential, commercial, and entertainment facilities) in the National Capital Region
- One mixed-use government center (with adjacent residential, commercial and entertainment facilities) in each of the 17 regions
- One major project per region for the 17 regions
- One major project per province (81 provinces)
"These projects will be done simultaneously. Some will be done on pure PPP, some hybrid type (government will finance the construction and then will bid out the management and maintenance of the project after construction), and some by government through the usual public procurement procedure. In order to make the facilities affordable to citizens, the government will not require a premium from winning contractors," she said.
- Binay: Allot 5% of GDP to accelerate infrastructure projects nationwide. Address underspending, and avoid “too much analysis by paralysis” in PPPs, a dig at the Aquino administration. (READ: Binay: Aquino years a lost opportunity)
“What is important is monitoring and supervision. This is where we are weak,” Binay said.
- Roxas: The current government has earmarked around P570 billion or about 4% of GDP for capital outlay. The next budget, which is set to be approved by Congress, sets around P800 billion or 5% of GDP for capital outlay.
Roxas said this was a far cry from capital outlay in 2010, which devoted only 1.8% of GDP for capital outlay.
“This has never happened in generations. Which is why for all of you business people who have committed to the Philippines, believed, put your money where your mouths are and invested in the Philippines all these years, I am confident in saying that times are good,” he said.
- Poe: She echoed other candidates in saying at least 5% of GDP should be allocated for infrastructure while adding that some are suggesting up to 7% should be allocated.
Roadblocks to infrastructure development, said Poe, include legal issues, and lack of technical knowledge.
“Let’s not just look at what we have today but look and predict out what the future population will need not just now but in years to come,” she said.
LIBERALIZING THE ECONOMY
Alcuaz asked the presidential aspirants about their stand on House Speaker Feliciano Belmonte Jr's proposal to change the Constitution's restrictive economic provisions.
The Belmonte resolution seeks to add the phrase “unless otherwise amended by law” to constitutional provisions that specify 40% limits to foreign ownership of land and business, including the management of media, franchises of public utilities, and ownership of educational institutions.
- Santiago: The economic provisions must be liberalized but it's unclear if the Belmonte proposal is the best means to do this. Santiago wants a referendum to study how best to amend the Constitution to increase the Philippines' foreign direct investments (FDIs), and make it at par with the FDIs of neighboring economies.
“I don't know if the young people will agree to the Belmonte proposal because it makes the Constitution at the mercy of politicians,” she said.
- Binay: He “fully supports” the Belmonte proposal. “I’ve been consistent in saying it's high time to amend the Constitution's economic provisions.”
- Roxas: Asked about LP vice chairman Belmonte’s proposal, Roxas noted that “not once” during his term as trade and industry chief did a foreign investor express the need for constitutional change.
Roxas said there was an impression that doing so would be a “panacea” to the country’s problems.
Instead, Roxas thinks reducing red tape and bureaucracy would be a better way of increasing the country’s FDIs. He said “common sense solutions” are needed in cutting down long processes.
“Hooray for common sense, right? It’s not so common,” he quipped.
- Poe: She was unable to fully expound on her stand, given time limitations, but Poe also pinpointed the need to make starting a business easier in the country.
“In the ease of doing business we have improved quite a bit, but it takes about 15 steps to start a business in the Philippines while in Thailand it just takes 4 steps,” she said.
Alcuaz asked specific questions to each of the candidates about businessmen's concerns regarding their campaigns. The presidential bets have different perceived weaknesses, ranging from health, corruption, to incompetence and inexperience.
- ·Santiago's health. Having stage 4 lung cancer is not a campaign issue. Questions about her health are merely meant to derail her campaign. (READ: Miriam: FOI priority but my medical records are secret)
She said: “When I assume office, I will hit the ground running. I will also hit other people in the vicinity.”
- Binay's alleged corruption. Asked about investors' fear of doing business under a Binay presidency because of a massive corruption controversy against him, the Vice President again said that the claims remain mere allegations that have not been proven in court. He denied statements that he was “not forthcoming” in addressing the accusations.
“The moral problem actually is not corruption, the moral problem is poverty," Binay said.
- Roxas and the Aquino admin's woes. The sorry state of transportation in the country, particularly in Metro Manila, is among the key issues that hound Roxas, who was transport chief for a year. As the administration’s candidate banking on the promise of continuity, the government’s apparent failures, are questions Roxas repeatedly faces.
On the issue of the Metro Rail Transit Line 3 (MRT-3), Roxas pinned the blame on the “original sin” of the contract struck between the government and the Sobrepeña group. The government has since ordered new carriages for the dilapidated MRT-3.
A “severe lack of engineers” in government makes it difficult not only for both government and PPPs to push through smoothly.
Roxas rejected the notion that “indecision” on the part of the government is to blame for underspending and delays in infrastructure.
“It’s hard to respond to a generality,” said Roxas, before detailing how he rejected a MRT3 proposal that would have put the Sobrepeña group at a supposedly unfair advantage. He said he was decisive in turning that down.
- Poe's inexperience. Among the 3, Poe is the newest in government, barely 3 years into her first term as senator. But the political neophyte, who leads early presidential surveys, sees it as an advantage.
“They say that my resumé is quite lean, compared to the others in terms of my length of service in the public sector, My resumé is lean enough that I don’t have the added baggage that is not necessary to be able to be successful in government,” she said.
Another issue that hounds Poe, a foundling who was adopted by two movie stars, are questions over her residency and citizenship but these were not asked during the PCCI forum.
In a chance interview with reporters after the forum, Poe reiterated that the issue against her is a case against all foundlings who stand to “lose their citizenships” should she be disqualified. – Rappler.com
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