Tag archive

TRAIN law

“BBB”: BUILDING THE ROAD TO PERDITION

in Countercurrent 
by Tagumpay Felipe

The Duterte regime’s much-touted “Build, Build, Build” (BBB) program is purported to be a “game changer” for the Philippines: they said it would accelerate growth towards a modern, industrialized economy. The program comes with a whopping price tag of Php 1.5 trillion, to be funded largely with foreign and local borrowing and increased taxation – both burdens ultimately to be borne by the masses.

Boldly, the regime claims that the BBB will lift 1.5 million Filipinos from poverty every year and reduce poverty incidence from today’s 22% to only 14% by the end of Duterte’s term in 2022.

It aims to achieve that by building as many as 75 infrastructure projects in various parts of the country. It avers that it will serve as the “solid backbone for growth.” Per June 13 reports, the implementation of 30 of the 75 projects are targeted to begin this year.

It is the BBB the Duterte regime invokes as rationale for the new taxes it has imposed this year on goods and services under the Tax Reforms for Acceleration and Inclusion (TRAIN) law.

But there’s a caveat to pursuing such an ambitious program.

Without addressing the country’s fundamental social and economic problems—such as landlessness, social and economic inequity, and multi-dimensional (economic, social, cultural, institutional) injustices—any economic program driven by massive infrastructure-building will primarily serve the interests of big business and the ruling elite, with little, if any, deepgoing improvement in the life of the poor majority.

The BBB’s monstrous tax-and-debt-driven budget easily conjures the image of hapless Filipino masses being crushed by the weight of trillions of pesos worth of concrete and steel.

Worse, instead of promoting self-reliant national development, the BBB program will lead the country on a disastrous road of indebtedness to and dependence on a fast-emerging foreign power: China.

Government tries to placate public unrest stirred by the TRAIN law. It saysthat up to 70% of revenues to be collected will be spent on the BBB. This is on top of other fund sources such as the floating of Php 12 billion in government bonds and a projected $167-billion loan package from China.

Already, the new taxes which took effect this year are being blamed for the highest inflation rates—3.8% in the first quarter of 2018, with a new high of 6.4% in August.

DEBT AND NATIONAL SOVEREIGNTY

But the loudest alarms are being raised about the serious repercussions on national sovereignty of getting heavily indebted to China.

Last March Zhuang Guotu, a Chinese academic from Xiamen University, said in an interview with the Global Times that “Chinese loans are usually accompanied by repayment agreements, which use certain natural resources as collateral.”
Duterte’s spokesperson refused to elaborate on that statement, dismissing it as “gossip.” China’s foreign ministry was likewise quick to shoot down Zhuang’s statement as his personal opinion and not reflective of the Chinese government’s policy or practice. But take note that Global Times is published by the People’s Daily, the mouthpiece of China’s revisionist ruling party.

China’s denial flies more in the face of what has befallen Sri Lanka. Last year Sri Lanka was forced to practically cede its strategic port of Hambantota to China, through a 99-year lease due to its inability to pay off more than $8 billion in debts to Chinese state firms.

Causing further suspicion is the thick veil of secrecy over the Duterte regime’s loan negotiations with China. To date, Duterte’s economic managers have not been transparent on what the actual interest rates, the conditions and repayment terms are of these Chinese loans.

Perhaps part of the reason lies in the fact that the terms are downright indefensible. Only last February, NEDA director general Ernesto Pernia caused an uproar when he admitted that the Duterte government has chosen to secure loans from China despite the far lower interest rates of 0.25% to 0.75% by other lender countries like Japan, as opposed to China’s 2-3%. This means it is 3,000% more costly to borrow from China.

In May last year, an article published by the influential business magazine Forbes warned that “Dutertenomics, fueled by expensive loans from China, will put the Philippines into virtual debt bondage.” It predicted that with the estimated $167-billion infrastructure loans from China added to the Philippines’ current foreign debt of $123 billion, the high interest rates imposed by China could cause the entire debt to balloon to over a trillion US dollars in ten years.

“Once the country has trouble repaying $167 billion in debt, plus interest, to China,” wrote Forbes contributor Anders Corr, “the Philippines will have to give political and economic concessions to China in order to repay annual interest, or renegotiate such a large quantity of debt.”

Corr added that this could include political concessions, such as giving up territory or oil rights in the South China Sea or Benham Rise. Or it could include economic concessions, for example, selling China its national companies, or agreeing to below-market rates on exports to China.

National Democratic Front of the Philippines (NDFP) chief political consultant Jose Ma. Sison has followed up Corrs’ article by lambasting the Duterte regime for accepting not just loans at high commercial rates but also defective and overpriced supplies and services from China.

Upon loan default, Sison pointed out, the Chinese corporations would convert the loans to equity, giving the Chinese further control over Philippine natural resources (including the Exclusive Economic Zone and the Extended Continental Shelf in the West Philippine Sea), the entire Philippine economy and government policies through puppets and dummies.

LINING THE POCKETS

Duterte’s tack, Sison added, is a foolish repeat of the Arroyo regime’s preference for overpriced projects and high-interest loan agreements (such as the anomalous NBN-ZTE deal) that benefited most big compradors and corrupt bureaucrats in both China and the Philippines, including the Arroyo couple.

In a similar vein, Corr pointed out the possibility of Duterte and his influential friends and business associates benefiting from hundreds of millions of dollars in finders’ fees for facilitating the debt deals with China. What Corr has posited could well be the answer to the riddle of why the Duterte government has persistently been going for the Chinese loans even under terms patently detrimental to the national interest.

DRAFT CASER PROVISIONS ON INFRA DEVELOPMENT AND TAXATION

From the NDFP perspective, infrastructure-building should be part of a purposive, strategic economic plan for national development whose implementation shall be democratically decided, publicly transparent, and socially accountable.
In stark contrast to the BBB, this is the spirit of a people-centered economic development path under the NDFP’s draft Comprehensive Agreement on Social and Economic Reforms (CASER).

As the Duterte regime has abandoned the GRP-NDFP peace talks, it also scrapped any opportunity to forge the CASER—a would-be historic agreement which aims to “solve the fundamental problems of exploitation, underdevelopment and poverty in order to establish the basis for a just and lasting peace.”

The Duterte government has shown that it is no different from past reactionary regimes that erroneously believed change could be effected merely through infrastructure building, without touching in any way the underdeveloped, agrarian and semi-feudal economic landscape through national industrialization and genuine land reform. Without these necessary changes, any new infrastructure will end up facilitating and reinforcing the classic exchange of Philippine raw materials, semi-manufactured goods and cheap labor for finished products from overseas that has characterized neo-colonial trade and perpetuated the country’s economic backwardness.

In the NDFP’s draft CASER, several provisions call for massive state spending on infrastructure in the push to attain rural development and national industrialization. But it stipulates the creation of mechanisms to ensure the role of people’s organizations in the planning and implementation of infrastructure projects, in both cities and countryside.

The CASER upholds both the necessity of responsible state intervention and making the welfare of the people the center of economic policies.

Taxation is one of several sources mentioned in the CASER for financing the national industrialization drive, including the needed infrastructure support. But it clearly puts in place a progressive tax system that charges lower income taxes on the masses and small firms, and higher income taxes on the wealthy and large corporations.

The CASER provides for the abolition of the value-added tax (VAT) and excise taxes on basic goods and services consumed by the working people. Taxes on luxury goods and services, however, shall be increased, as will consumption taxes on alcoholic drinks, tobacco products, gambling and other socially or economically undesirable items.

The CASER also calls for regulations on public and private foreign borrowing to ensure that foreign loans support national development, and save domestic monetary and exchange rate, financial, and fiscal policy from being hostage to foreign interests due to debt bondage.

And while the CASER calls for breaking the country’s economic dependence on the US and Japan, it warns about developing new dependencies on other foreign powers.

Because Duterte’s ruinous road-building program is heading towards a debt-ridden future, it deserves to be rejected by the Filipino people.

You might be interested in

PEACE HAWKS LIE, Here’s Why

by Pinky Ang The on again off again peace negotiations—scuttled by the Duterte regime—can still be saved if the people

Ousting Duterte

in Editorial

The tyrant Duterte is feeling the heat, the fear, of his impending doom. He talks of a plot, a conspiracy, to oust him. The CPP-NPA, the Liberal Party and the Magdalo group have denied this. No plot is necessary for someone who is destroying himself, for destabilizing his own regime, and for causing the unstoppable loss of his DDS (from being Duterte’s diehards, they’re now known as “Disgusted Duterte Supporters”).

The problem is the devil himself. He came to power dangling the promise of change—of wiping out crime, corruption and poverty. Within two years the devil has unmasked and revealed himself. It turns out he is a drug protector, especially where his son and cronies are involved. He is a fascist and a criminal, dismissing human rights, stirring up his security forces to kill civilians, especially the poor and marginalized, and linking opposition groups to terrorism. He is also a misogynist, to say the least.

Duterte has yet to convincingly defend himself against corruption. He has yet to sign a waiver on alleged billions of pesos he stashed in banks. His Davao group has profitted handsomely from contracts with big local or foreign investors. Also, he keeps company with the likes of the Marcoses and the Arroyos—the nation’s great plunderers.

Duterte has only himself to blame for the debacle of his economic managers. He backed them fully, even defending them, while the Filipino people suffered. He pushed for and signed the Tax Reform for Acceleration and Inclusion (TRAIN) Law that resulted to prices rising sharply and unprecedentedly within ten months of implementation. His administration offers importation and smuggling in the face of the nation’s food crisis. They maintained contractualization, joblessness, land conversion, environmental devastation, theft and plunder of the nation’s resources.

The in-fighting within the Duterte regime and the ruling clique has become more evident. Members of the Cabinet have oftentimes publicly contradicted Duterte’s statements and policy pronouncements, including the shift to federalism. Discord within the military and police has emerged and could no longer be contained.

On top of these, they ended the chance to push for substantial and economic reforms that would address chronic poverty and the roots of the country’s 50 years of armed conflict in termininating the peace talks with the National Democratic Front of the Philippines.

Increasingly, and with all the signs pointing to the establishment of a fascist dictatorship, the Filipino people want to finish off Duterte and his regime in the same manner they ousted Marcos in 1986 and Estrada in 2001. There it was, millions of people, though unarmed, rising up against tyrants, egging and encouraging a rebellion from the military’s ranks or causing key officers and soldier to distance themselves from the regime. This combination of people’s uprising and military rebellion or withdrawal of support has become a cardinal rule in toppling regimes.

No tyrant has ever recognized or given credence to the power of the people in ousting a dictator. Even Duterte would lead us to believe that only plotters and conspirators, whether real or imagined, are out to get him. He continues to demean the Communist Party of the Philippines (CPP) by calling it as mere plotter, The truth is, the CPP leads and promotes the broad united front of democratic and progressive forces in ousting a regime because it believes in the power of the mass movement to carry out its demands.

So is it with the armed mass movement in the countryside. The overthrow of this regime is being supported by the tactical offensives of the New People’s Army, weakening Duterte’s military machine in suppressing the people. This gives the masses in the coutryside time to strengthen and consolidate themselves not just to help out in the movement to oust the fascist regime, but to ultimately overthrow the semicolonial and semifeudal system in unity with the urban masses.

In the coming days, as the country reels further in crisis, Duterte is sure to slide down in the eyes of his supporters faster than he won in a landslide. His ouster is inevitable. No matter his physical or mental state, the gravity of his crimes is already causing his regime to crumble. In this regard, it will be so much easier for a growing, developing, and surging mass movement to see the end of Duterte. ###

You might be interested in

The real extortionist drives the TRAIN

in Editorial 
by Liberation Staff

The reactionary government criticizes the revolutionary taxation levied on foreign corporations and local big compradors as extortion. But these taxes are for the use of the land and natural resources in the guerrilla fronts which truly belong to the people and should primarily benefit them. Unlike the bureaucrat capitalists in government, who extort and pocket people’s taxes for their personal aggrandizement, revolutionary taxes serve the masses and sustain the democratic revolution that will liberate them from the yoke of ruling class exploitation.

The Duterte government’s new tax reform package is one big extortion activity against the poor.  Like a campaign promise aimed to lure and deceive, what the law offers in one hand it takes away by the other as expeditiously and as brashly. The Tax Reform Acceleration and Inclusion (TRAIN) Law, R.A. 10963, promised to benefit more workers as tax exemption is expanded to cover not only the minimum wage earners but also those in the middle income group receiving P250,000 per year. But, the adjustment in excise taxes of petroleum products such as diesel and LPG, coal and sugar-sweetened beverages and expansion of the tax base by removing Value Added Tax (VAT) exemptions have adverse repercussion especially on the poor.  Increase in petroleum products adversely affects the price of electricity since bunker oil is used to fuel power generation, just as coal does. Price increases of diesel and gas, which are used to transport people and deliver goods, increase consumption spending.

Contrary to the Department of Finance (DOF) claims, majority of Filipinos, about 15.2 million families, will not benefit from personal income tax exemptions (PIT). They are either minimum wage earners who are already tax exempt or informal sector with irregular income who do not pay income tax. However, they will surely bear the brunt of the domino-effect price increases in hosts of goods, utilities and services.

The DOF continues to justify the TRAIN with its convoluted reasoning supported by an overdose of statistics. On the other hand, the mitigation measures offered by the government to cushion the TRAIN impact on consumer prices is an admission of the scourge faced by the poor from it.  The measures include a 10% discount on NFA rice up to 20 kilos a month, tax reform cash transfer of P200 per month for the poorest 50% households starting in 2018, free skills training under TESDA－certainly a pittance mooched off “government magnanimity”.

Yet, what can be expected of a reactionary State ruled by majority of landlords and big compradors but legislations for their self-serving interests. The Build-Build-Build program obsession of the Duterte government for infrastructures, where most of the increase in taxes are supposedly trained at, serve the development and investments for foreign investors, local big compradors and landlords. Likewise, the increase in salaries of State armed forces is to oil their killing machine and perpetuate their fascist rule.

In contrast, the revolutionary taxes build schools to train not only the youth but also adults on crafts to increase income, as well as on numeracy and literacy; the peasants to improve their agricultural productivity and insure food sustainability. Through these, the masses in the far-flung areas long neglected by the imperial government can avail of health and medical services. The training of paramedics is an important aspect of these services. Cooperatives are put up to jump start their collective endeavour for improving their livelihood. All efforts help boost the communities’ self-reliance. While complying with the NDFP policy on environmental protection and ecological conservation, relief and rehabilitation program is likewise instituted to cope with calamities, including man-made disasters from destructive mining and logging of foreign and local corporations.

The national democratic revolution advances through the strength and determination of the revolutionary forces and the myriad support of the masses under the leadership of the Communists Party of the Philippines (CPP), the New People’s Army (NPA) and the National Democratic Front of the Philippines (NDFP). Revenues from revolutionary taxation, including voluntary financial contributions from nationalist businesses and enlightened gentry, who believe in the justness and necessity of the revolution, help in the advance the democratic struggle. These also provide for the needs of the NPA as they immerse, organize and serve the masses.

Hence, no matter how much the reactionary government vilified the revolutionary movement and its taxation activity, it has failed desperately.  In the same breath, the reactionary government will fail, desperately, to check the advance of the people’s democratic revolution. ###

You might be interested in

Go to Top