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Royally screwed

One remembers one’s childhood and what was almost a mantra when one failed to eat all of what was on one’s plate: “Think of the millions of poor, starving children in China who are hungry, and here you are wasting your food.” Or something like that, designed for maximum effect: shame and guilt on the part of the eater.

But it also must have generated a lot of resentment against the poor, faceless children elsewhere for being the cause of our guilt. Or maybe one came to develop a sense of callousness toward them, because one gets tired of hearing the same thing over and over again.

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I say all this because how many times have we heard or read something like “the effects of the corruption (or the crisis or the disaster) fall disproportionately on the poor”—and failed to really appreciate the significance of the statement? Or looked the other way, or turned the page?

I hope not this time, Reader. Let’s think back over the past year. What was in the economic news every month was the inflation rate and how it was increasing past the amount targeted by the government. There were screams of outrage—against the TRAIN law, against the National Food Authority, against President Duterte (who manfully took full responsibility at one point, if I remember correctly), even against the weather.

The inflation targeted for 2018 (Philippine Development Plan 2017-22) was 2-4 percent, but January and February rates were already dangerously close to the upper end (3.4 and 3.8 percent), and by March the target was breached, going steadily up until it reached a high of 6.7 percent in September and October, before going down to 6 percent in November and 5.1 percent in December. At which point everybody relaxed a little, after being told that next year’s inflation rates would be lower. (Please understand, Reader: A lower inflation rate does not mean lower prices. It means that the prices are increasing at a slower rate.)

What we ignored was what was happening to the bottom (poorest) 30 percent of our families. No one (except the Philippine Statistics Authority, which gathers the data) noticed that from January, they were already contending with above-target inflation rates (4.7 percent in January and 5.4 percent in February). And this happened throughout the year. We suffered a high of 6.7 percent inflation in September and October? Well, at precisely the same time, our poorest 30 percent were contending with inflation rates of 9.5 percent.

The average inflation rate faced by the poorest 30 percent of the people for the 11-month period (January to November) in 2018 was 7.1 percent. Contrast that with what we (the nonpoor) experienced for the same period: 5.2 percent. (All data, PSA)

What makes it all the more unfair to the poor is that, at the same time, the take-home pay of the nonpoor (except for the top 0.01 percent) was increased because of the TRAIN law income tax reforms. The poor had no such increase in take-home pay. In effect, the nonpoor were given the wherewithal to more than cope with any price increases, while the poor were given nothing.

Oh, wait. I err. The TRAIN law promised to give the poor an unconditional cash transfer of P2,400 for 2018 and P3,600 for 2019 and 2020. First, compare this with what the nonpoor got by way of increases in annual take-home pay in 2018: Anywhere from P6,400 (skilled worker) to P142,000 (CEO), per the finance department. And second, the poor didn’t get their cash transfers until the second quarter, and I still haven’t seen an accounting of the transfers; in other words, I don’t know if the poor are now getting them on time. The Landbank and the Department of Social Welfare and Development are quite close-mouthed about it.

And where would the unconditional cash transfers be coming from? From the increase in oil excise taxes. By the way, the top 1 percent of our families income-wise will pay 13 percent of those excises. The top 10 percent of families will pay 50 percent of those taxes. And the bottom 30 percent of our families will pay 5.4 percent of those taxes. So for heaven’s sake, Reader, let’s stop complaining about those oil excises. They haven’t been increased since 1997, and that’s where we will get the money that will, to a very small extent, help the poor get the same benefits that the rich have gotten from TRAIN.

To summarize: Our poorest 30 percent got royally screwed in 2018. And everyone is looking the other way.  Ho-hum. But can we at least try to do something about it, moving forward?

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TAGS: China, column, opinion, starving, TRAIN Law
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