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Wednesday, June 16, 2021

Duterte administration’s recovery plans help the rich more than the poor

IBON said that
the government’s supposed recovery plans are more concerned about supporting
business profits than helping the mass of unemployed Filipinos. The finance
department’s Philippine Program for Recovery with Equity and Solidarity
(PH-PROGRESO) and stimulus bills in Congress give considerable support to
businesses while millions of affected families get token support at best.

the economic managers does not give any cash support to poor and low-income
families most in need, including the mass of unemployed, noted IBON.

The Corporate Recovery and Tax Incentives for
Enterprises Act (CREATE) proposal of PH-PROGRESO wants to give Php667 billion worth of
corporate tax breaks, the biggest in the country’s history. The Php133.7
billion in loans and guarantees, Php142.8 billion in other tax cuts and
foregone revenue, and Php233.3 billion in additional liquidity will also
benefit mainly enterprises.

The group said that the stimulus bills in Congress, including the Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (ARISE) recently passed by the House of Representatives (HOR), are not much better. ARISE allocates a total of Php40 billion for cash-for-work programs and Php42 billion for education subsidies.

On the other hand, it allocates Php1.2 trillion for formal enterprises, said the group. There is a strong likelihood that the bulk of this will go to large firms of oligarch conglomerates and possibly even foreign transnational corporations. Big firms dominate the tourism, transport, import and export, manufacturing, and service industries identified for support. There is also no explicit prohibition of foreign companies, IBON noted.

Meanwhile only
Php135 billion of the Php1.2 trillion is explicitly for micro, small and medium
enterprises (MSMEs). Giving large firms equal access to the subsidized
financing will likely crowd out MSMEs especially the neediest smaller firms,
IBON said. The focus on formal enterprises will also mean that vast numbers of
informal earners and displaced workers will not be reached.

This Php1.2
trillion includes the Php110 billion for wage subsidies. The stimulus bill says
that freelancers, professionals, self-employed, and overseas Filipino workers
can also receive this. In practice, however, there is likely to be a bias for
workers in formal enterprises, which means the subsidies are in effect subsidies
for firms’ payroll expenses, said the group.

IBON said that support to enterprises should give much greater and more explicit priority to Filipino MSMEs. These are the foundations of the domestic-oriented development so urgent amid the global recession and increasing protectionism even by the world’s most powerful economies.

At the same time, government recovery plans need to give much greater direct income support to poor and low-income households. This is both direct support for families’ welfare as well as a meaningful stimulus that increases effective demand in the economy.

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