MOST of the news the past week was dominated by the filing of candidacies — and the various shenanigans that usually attend that activity — for the 2019 midterm elections, which was just as well, because most of whatever else was worthy of a headline seemed designed to be intentionally frustrating.
The issue with the greatest public impact is the matter of suspending the programmed increase in the fuel excise tax, which will happen in January if the government does not intercede. The fuel tax scheme provides for a suspension of an increase in the tax rate if the price of oil exceeds $80 per barrel for the three months preceding the increase. Since that seems all but certain to happen, calls have been made to issue the suspension to relieve a bit of the upward pressure on fuel prices and inflation.
What should be an obvious and straightforward policy decision, one that is universally supported by the public, the business sector, most economic analysts, and Congress, has instead devolved into reluctant waffling and confusing mixed signals.
The disruption is being led by Finance Secretary Carlos Dominguez 3rd, whose department initially recommended a suspension of the fuel tax increase to President Rodrigo Duterte, but quickly reversed itself. In justifying its indecision, the Department of Finance (DoF) pointed out that oil prices have gone down (although they remain over the $80 threshold) in the past few days, and that crude futures for the next six months — even though these are not the yardstick on which the suspension threshold is based — are below $80.
Dominguez, who reacts to any potential attenuation of government revenue as though it will be an expense he will have to pay for out of his own pocket, even resorted to a clumsy threat aimed at the people who arguably stand to benefit the most from a suspension of the tax increase. The cost, Dominguez warned, would have to be made up by cutting public assistance, specifically the fuel subsidy to jeepney drivers and the meager P200 per month cash subsidy granted to the country’s poorest families.
Neda head Ernesto Pernia, whose approach to policy seems to be that of a man who has just woken up from an unscheduled nap and is not entirely sure what is happening around him, has only added to the confusion by issuing contradictory yet somehow still diffident statements. Pernia at first announced — erroneously, as it turned out — that the rate hike suspension had been approved, but then quailed in the face of Dominguez’ dissent to meekly suggest that, “maybe it’s better if we don’t suspend [the tax increase] after all.”
The squabble over the fuel tax is, sadly, yet another manifestation of the lack of rigor applied to the ways laws in this country are written. Although the suspension of the excise tax increase appears to be an automatic mechanism, and indeed should be, it actually only provides that the tax increase “may” be suspended —– a maddening bit of ambiguity that takes guardianship of the best interests of the country out of the hands of the law, and puts it into the care of a few individuals whose motivations are unclear at best.
Maynilad is at it again
Yesterday’s editorial in this paper shed some light on another issue that just can’t seem to die its well-deserved death, the cynical and avaricious insistence of water concessionaire Maynilad that is entitled to be functionally tax-exempt and should be permitted to pass its corporate tax liabilities on to its customers.
Maynilad already won at least two rulings in favor of its incredible demand in connection with its rate hike application for the period covering 2013-2017, and is trying its luck again. It included corporate income tax recovery in its calculations for the 2018-2022 rate rebasing period, and again regulator Metropolitan Waterworks and Sewerage Services (MWSS) has bravely, but probably futilely rejected it. This sets up another appeal for arbitration by Maynilad to the International Chamber of Commerce (ICC) in Singapore, which will almost certainly rule in the water company’s favor again.
A mechanism for third-party resolution of contractual disputes between governments and investors is a sensible concept on the surface, but has become so abused as to make it completely unreliable. The ICC is an opaque, business-friendly body — the details of its awards in arbitration cases are kept strictly confidential — and is a poor choice of proxy for the Philippines’ legal and regulatory authority. It also does not help that this country’s lawmakers cannot seem to agree on or consistently apply a definition of “public utility,” a small but significant bit of clarity that would prevent much of the current problem with Maynilad.
How this will all come out in the end is not exactly certain, but the prognosis is not good; the last case left the government on the hook for P3.44 billion in compensation to the already bloated coffers of Maynilad.
I’m not the only one who thinks Baguio is a dump
My column earlier this week about the sad state of the Philippines’ historic summer capital (“Like Boracay, like Baguio,” October 18) elicited an informative response from a recent visitor to the mountain city, Professor Ian Morley of the Department of History at the Chinese University of Hong Kong. Morley’s specialty is urban planning history, and so to learn that he also found yet another of Daniel Burnham’s Philippine masterpieces gone to hell somewhat discouraging comes as no surprise.
Morley’s observations from a five-week visit to Baguio were published earlier this month in the journal Asian Geographer, and neatly sums up Baguio in its conclusion: “As a city that was from the outset composed to give citizens opportunity to interact with greenery/nature, its rapid urban growth during the second half of the twentieth century and early twenty-first century has, together with weak political administration, transformed the city from one of beauty to one of deep predicaments.”
For his part, Morley is not at uncertain as to who is to blame for the city’s deterioration, at least in the period since the tragic earthquake of 1990. He writes, “…the local government’s intention to construct multi-storey car parks within the public space [Burnham Park] have become interpreted by many of being yet another example of the municipality’s lack of thought for disaster risk management, sustainable development, and citizens’ wants and needs.
“Put succinctly,” he continues, “many in Baguio see the car park proposals as a metaphor of the political stagnation and environmental degradation that has typified Baguio since the 1990s, i.e. the age that has been dominated by politician Mauricio Domogan (city mayor 1992–2001, 2010-, and Baguio representative in the Philippine House of Representatives 2001–2010).”
Strong stuff, and something that is not likely to earn Professor Morley a red-carpet welcome from the city’s overlords anytime soon, but nonetheless a dead-accurate assessment and one that more people in Baguio than the good mayor and his party may realize would agree with, as I observed myself during a year of living in neighboring La Trinidad.
In spite of the enormous political obstacle in City Hall, however, there do seem to be some signs of hope, which Morley also highlighted in his paper. There is a lively environmental and historical preservation advocacy at work in the city and surrounding area, and some institutions like the University of Philippines and the Department of Tourism have made inroads towards preserving the city’s heritage without the involvement of the local government.
Much more work is needed, of course, beginning with a comprehensive change of perspective in the local leadership. But with some support from outside, change for the better may indeed come before it is too late.