Forget about infrastructure – Manila Standard


Driving home last week along C-5, I was overwhelmed by a sudden desire for hototai. I stopped by Comida China (just before Rockwell Grove) for a poquito serving of their piping hot soup, washed down with two glasses of ripe mango shake—great for the palate but very bad for the sugar count.

On my way out, I ran into Karl Kendrick Chua, the Finance undersecretary who’s running the administration’s tax reform progress through Congress. Karl is impossibly boyish-looking, a colleague in the Foundation for Economic Freedom, and ADB’s chief economist for the Philippines before he was dragooned into public service at DOF.

It was from him that I heard the latest gloomy update on tax reform. The so-called TRAIN bill (“Tax Reform for Acceleration and Inclusion”) is the first of five tranches of tax reform legislation being sent up to Congress by the Duterte administration. Unfortunately, the version passed by the Lower House reduced the projected net tax gain from TRAIN by P30 billion, mainly to accommodate tax breaks for cooperatives.

Now in the Senate, the emasculated TRAIN bill may be shrunk even further, by up another P40-B, in order to win approval. The senators are already noisily complaining about the proposed new taxes on fuel products and on sweetened beverages. If they have their way, the TRAIN bill may be cut by nearly half, from its original projected net gain of P164 billion, to less than P100 billion when it clears the Senate.

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It’s obvious that the senators acutely remember what happened to one of their colleagues, Ralph Recto, who authored the unpopular EVAT reform bill in 2005. For his pains, Recto lost his reelection bid in 2007 and had to wait until 2010 to regain his seat.

Never mind that EVAT reform is universally credited today as the country’s single biggest fiscal achievement in recent years, one that nearly wiped out our budget deficit (were it not for the global financial crisis in 2008), financed former President Arroyo’s ambitious infrastructure program, reversed our downturn in credit ratings and put us on the road to investment grade.

Duterte’s tax reforms have the potential to accomplish even more for the country. And yet the senators do not seem to appreciate the parallels between EVAT reform in 2005 and TRAIN in 2017. All they seem to be able to see is what happened to Recto, who suffered that most horrible of fates for a politician: losing an election.

I don’t need to remind the reader that an excise tax on diesel fuel falls relatively heavier on the affluent SUV owner, rather than on poor jeepney passengers who effectively get to share that cost among themselves. Nor need I mention that a tax on sweetened beverages, like the sin taxes on alcohol and tobacco, will be good for public health.

Let me just remind you of some of the different infrastructure projects that will have to be given up if we also give up P70 billion in additional tax revenues due to the timidity of our legislators. If they don’t know that you can’t spend what you didn’t earn, they ought to turn over their seats to their housewives, who’ll know better.

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From the Department of Public Works and Highways:

Metro Manila Skyway, Stage 3: Cost P37 billion, due 2018. Reduce travel time between Balintawak, QC and Buendia Avenue, Makati from two hours to 15-20 minutes.

NLEX-SLEX Connector Road: Cost P23 billion, due 2020. Reduce travel time between NLEX and SLEX from 1.5-2 hours to 15-20 minutes.

Cavite-Laguna Expressway: Cost P36 billion, due 2020. Reduce travel time between SLEX and CAVITEX from 1.5 hours to 45 minutes.

Southeast Metro Manila Expressway (C-6), Phase 1: Cost P31 billion, due 2020. Six-lane expressway connecting Skyway FTI in Parañaque to Batasan in QC.

Bridges crossing Pasig River (six), Marikina River (four), and Manggahan Floodway (two). Total cost P19 billion.

From the Department of Transportation:

LRT-1 Cavite Extension: Cost P65 billion, due 2021. Serve an additional 300,000 passsengers per day between Baclaran and Cavite with eight new stations and three intermodal facilities.

MRT-7: Cost USD 1.5 billion, due 2019. New 23-km railway system to serve 420,000 passengers per day between QC and San Jose del Monte, Bulacan.

Mindanao Railway, Phase 1: Cost P36 billion, due 2021. First railway system outside Luzon, with Phase 1 connecting the cities of Tagum, Davao and Digos.

Metro Manila Subway, Phase 1: Cost P250 billion, due 2025. Initial phase will bring commuters from Mindanao Avenue, QC to FTI, Taguig in just 31 minutes.

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If you’re excited by these projects, like me, then you should be. Our country is dead last among the six big Asean states in every infrastructure category, bar none. It’s way past time to start putting cement and steel in the ground for the benefit of our progeny.

The problem is that most of our legislators seem to think we don’t know how to dream big dreams. We should let them know that, yes, we do. We should let them know that we expect them to start leading us to those dreams instead of just grovelling for our votes.

Readers can write me at [email protected]

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