Get Real

Worse than the pork barrel scam

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Public attention is now focused on the pork barrel scam, as well it should. That the people’s money is either being diverted into private pockets or is being used for projects whose net benefits have not been compared to, much less been found greater than, those that could accrue to alternative uses, is of fundamental concern.

How much has been diverted is the subject of a hopefully soon-to-be-released report by the Commission on Audit. How much is being used for projects, which although presumably not tainted with corruption, result in lower economic and social rates of return than other projects, has not been estimated at all, although one can presumably get an order of magnitude by comparing the lists of projects financed by the pork barrel with the lists of projects that have been prioritized by the development councils of the local government units in the areas where the projects are located.  In either case, the waste is enormous, with the Filipino people, particularly the poor, getting the short end of the stick—a raw deal.  A case of the rich getting richer, and the poor getting screwed—by their so-called public servants.

At the same time, there are government functionaries, such as the likes of Internal Revenue Commissioner Kim Henares, figuratively busting their gut trying to increase the government’s so-called tax effort ratio (the ratio of tax revenues to GDP).  One wonders how they feel when they see the fruits of their labors being thus dissipated.  And then there are those who use this dissipation as an excuse to justify the fact that they are themselves evading or avoiding their tax.  A vicious cycle, no matter which way one looks at it.

The bottom line is that there is absolutely no valid and/or non-self-serving reason for retaining that pork barrel, and yet only a handful of our legislators are pushing for its abolition. The term for the rest:   kapalmuks.

Alas, there is an even greater scam that is being perpetrated on the Filipino people, beside which, in terms of orders of magnitude, the pork barrel pales in comparison.  A scam that allows the rich to get richer, and the poor to get screwed coming and going. A scam that affects not just the present generation, but also generations to come. A scam that has the imprimatur of all branches of government: Congress, the executive branch, and the judiciary (Supreme Court). In total contravention of inclusive growth, social justice, sustainable development.

What humongous scam is this?  That foisted by the Philippine Mining Act of 1995 or Republic Act 7942.

Why is it a scam?  Because the Filipino people, as owners of  the minerals, receive, under RA 7942, only TWO Percent of the value of the mined ore, as their share of the proceeds from the mining development enterprise.  Period.  And for so-called FTAAs (financial and technical assistance agreements), our share would consist of 50 percent of the net income of the operation after taxes—from which would be deducted all taxes paid to the government. Which effectively  reduces that 50 percent to, as former Environment Secretary Angel Reyes commented, “zero or nil,” and which Supreme Court Justice Antonio Carpio termed a “sham.”

One way to understand how grossly disadvantageous this sharing arrangement is to the Filipino people (the Constitution, by the way, provides for equitable sharing) is to compare it with the sharing agreement that is now in place with respect to the Malampaya project (an agreement during the term of Cory Aquino). In the latter, the Filipino people get SIXTY PERCENT of the production value of the output, after exploration and production costs are deducted. In other words, 60 percent of the gross profit.  The other party (Shell) gets the 40 percent—from which it then pays the government income and other taxes. In other words, the government, as owner, gets its (60 percent) share of the profits, aside and distinct from the revenues that it collects arising from its sovereign power to tax.

What is the magnitude of this scam? Here’s one way of comparing the orders of magnitude involved:  About 10 or so years ago, the value placed on the metallic minerals in the country was something like $900 billion.  Assuming an exchange rate of P40=$1, we’re talking P36 trillion.  Subtracting development and production costs assumed to be 60 percent of that value, the gross profits before tax would be P14.4 trillion.

Using the Malampaya formula, the share of the government/Filipino people would come out to P8.64 trillion.  Using the 2-percent formula of the Philippine Mining Act, our share is P720 billion—or eight hundredths of one percent (0.08 percent) of what we would have gotten using Malampaya. In effect, if all those mineral resources had been extracted, under RA 7942, the loss to the Filipino people would be P7.92 trillion. And this does not even take into consideration the cost of the adverse environmental effects of mining.

Let us assume that the entire pork barrel is P50 billion a year (pork barrel for the legislature is actually P27 billion, and the executive pork barrel cannot possibly be P23 billion, but I just want a good round number), and that all this ends up in the pockets of the corrupt. It would still take 158 years of pork barrel scamming to match what is being cheated from the Filipino people by the Philippine Mining Act. That’s where the “pales in comparison” description comes from. (Up next: How the Philippine Mining Act of 1995 got past the executive branch and the Supreme Court)

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  • WalterPaulKomarnicki

    this seems to be a legacy of the worst aspects of colonialism, a pathetic royalty on minerals owned by the people, maybe the next scandal will see such companies either paying no tax at all, or getting handsome refunds back on their investments.

    if the legislators are so timid with the big mining companies, what else are they too unassertive about when it comes to protecting the interests of the people?

    • desi derata

      Did they bother in past to support the AFP and the police?

  • desi derata

    Good one Madam Monsod.
    I had the pre-conceived notion that this article will be another swipe at the administration but I read through and undertood the content.

    Mrs Monsod, please be more vociferous on this issue. All along I was suspecting that Pangilinan, et al, are frying the Filipinos with their own blood, sweat and tears.

    I have been hoping against hope that people like you would actively help the government in finding ways on how to improve the lot of the common Filipino. I don’t know what happened but it seems that you became an outcast vis-a-vis PNoy’s circle of advisers.

    Can you please try to seek audience with him and explain your findings? I believe the President is a reasonable man and he will hear you out. He will be happy to note that their mother left something that speaks volumes of love to her countrymen. He will, I am sure, do something about this onerous, disadvantageous Mining Law.

    With regards to the Legislative Branch, the honorable ones are busy erasing their tracks on the PDAF scam. There are still few good men and women in the assembly while the rest need to be shamed or whipped to act proactively.

  • eight_log

    I salute you Mdm Monsod on your stand in this issue … keep the heat going!!!!

  • Kitkilatis

    Sa ilalim ng pekeng demokrasya na meron ang Pilipinas ay talagang hindi maampat-ampat ang kultura ng kurapsyon till kingdom come, at walang magagawa ang “we the sovereign Filipino people” daw.

    Ewan ko kung may naiisip po kayong mas mainam na solusyon o gamot sa malala ng kanser ng ating lipunan pero para sa akin bukod tanging pagpairal ng TRIAL BY JURY ang lunas. At kapag hindi pa mangyayari ito sa malapit na hinaharap ano ang posibleng mangyayari? Ika nga ni JFK: “Kung ang malayang bansa ay di kayang tulungan ang sandamakmak na mahihirap, di din nito kayang protektahan ang iilang nanggigitata sa yaman.”

  • Spokesman2

    Galing ng strategy ni winnie, sino bang kamag-anak or ka KKK mo ang nasa listahan ng P10B PDAF anomaly? Ang PDAF scam is a yearly scam incomparable ang magnitude nyan sa sinasabing mong mining scam. Yang mining scam mo in paper lang yan, since 1995 may nag produce naba na bagong mina under FTAA? Wala, kaput nil, nada! Lahat ng minahan operating ngayon ay under pa sa MPSA at mga more than 50years na in operation. Kaya unat payang balat mo operational na mga mina na ito. Nung nagsimulang kumunat yang balat mo ni isang bagong mina walang nagbukas. Pero yang nakawan sa PDAF, hindi kapa menopause nangyayari na.

    Good try to misdirect us, pero hindi lahat ng pinoy ay bobo para mauto mo, winnie the pooh.

    May NGO ba kayo ng mister mo winnie na tumanggap ng PDAF?

  • eivra23

    Eto yata ang connection ng minahan at babuyan:

    Sa inyo (foriegn investors/businessmen) ang minahan, sa amin na ang babuyan (pork barrel) ~ lawmakers, government anointed-money-making-dealers, corrupt government employees, abusive soldiers and police, etc

  • @centaurchief

    IMPEACH ALL CROOKED SENATONGS!
    IMPEACH ALL KAWATANG TONGRESSMEN!!

    ALL REMAINING HONORABLE CONGRESSMEN (KUNG MAY NATITIRA PANG HONORABLE), PLEASE INITIATE AND FILE IMPEACH PROCEEDINGS!

    KUNG NA IMPEACH ANG ex-CHIEF JUSTICE, MAS KARAPAT DAPAT
    MA-IMPEACH ANG MGA SANGKOT SA PDAF-SCAM NA SA KASALUKUYAN AY NANATILI SA PWESTO NG GOBYERNO! KAKAPAL!

    IMPEACH THEM FOR BETRAYAL OF PUBLIC TRUST!

    IMPEACHMENT! IMPEACHMENT!

  • Leonardof

    Commonsence is that benificiaries of the 10 billion pesos PDAF scam will be active in creating diversion away from this topic. To portray the PDAF scam as nothing compared to a literarily created mining scam is a clear and simple diversion away from the humongous PDAF scam. It is plain demagoguery to suggest that the people’s attention and anger should veer away from the PDAF scam.

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