PRESIDENT DUTERTE delivers his first State of the Nation Address today with his economic team promising to make the poor feel the benefits of economic progress.
Consider, for instance, the updating and indexing to inflation of individual income tax rates, which will have the effect of increasing the take-home pay of the working middle class. Finance Secretary Carlos Dominguez has also promised that corporate income tax would fall to 25 percent from the current 32 percent, one of the highest rates in Asia, to make local firms more competitive.
This tax relief was actually proposed to the Aquino administration, which turned it down because of its so-called negative impact on government finances and, in turn, on the country’s favorable credit ratings. There is a way around it, the new administration says, and this is to generate the revenues to be lost from the tax break by increasing the imposts on soft drinks and possibly other “sin” products like alcoholic beverages and cigarettes. Taxes on oil products will also be raised and consumers will find the impact manageable considering that crude prices have fallen by half since last year.
In the power sector, Energy Secretary Alfonso Cusi has promised to lower electricity prices, which are the highest in the region. Price is just a number arrived at by considering several inputs, he told the Inquirer business staff at a recent roundtable. It is these inputs that his team will study to bring down the cost of electricity. For example, Cusi said, the administration will determine if the “stranded cost” component could be taken out of the monthly electric bill. This represents the unpaid liabilities of the defunct cash-strapped National Power Corp.
Meanwhile, in an earlier interview with the regional media, Agriculture Secretary Emmanuel Piñol identified immediate intervention measures to assist farmers. These include the nationwide implementation of the School-on-the-Air program, wherein the latest agricultural practices and technologies will be shared by Department of Agriculture technical staff with farmers; easy access to financing by allocating P1 billion per region for agriculture programs and another P1 billion for food production livelihood projects in the 20 poorest provinces; and efficient marketing of farmers’ produce through well-functioning regional food terminals.
MSMEs, or micro, small and medium enterprises, will be the focus of Trade Secretary Ramon Lopez, who has vowed to encourage the growth of “inclusive” businesses (IBs) to generate more jobs, produce cheaper goods, and cut poverty. The World Bank defines IBs as those that provide goods, services and livelihood on a commercially viable basis to people at the base of the pyramid by making them part of the value chain of companies as suppliers, distributors, retailers or consumers.
Transportation Secretary Arthur Tugade’s promise is to ease traffic woes, which have been cited as a major reason why the Aquino administration lost in Metro Manila during the presidential election. In a TV interview,
Tugade, a former head of Clark Development Corp., said he was looking to adapt the Bolivia model of using cable cars not only to alleviate traffic congestion but also for “scenic purposes.” Cable cars each carrying 35 persons will be installed first in the Pasig and Makati central business districts, he said. And the best part is that the system can be operating within a mere 18 months.
Related to this is what Budget Secretary Benjamin Diokno has described as “a golden age of infrastructure” in the next six years. The plan is to spend close to P900 billion on hard public infrastructure to make up for the years of neglect. Three to four more railway lines in Metro Manila, as well as additional airports, will also be put up.
The Duterte administration’s ongoing campaign against crime and illegal drugs is marked by brutal violence and vigilantism that have appalled various sectors. But on the economic front, it appears that the administration is off to a good start. The promising thing is that the programs of the new economic team have the full backing of the President. That makes a big difference.