IF Filipinos will be able to chart the troubled waters of 2023, Ibon Foundation Inc. said the national government would have to increase social protection to households and micro, small and medium enterprises (MSMEs) nationwide this year.
The headwinds faced by the global and local economy this year have already been cited by multilateral agencies, businesses, non-government organizations and even the government, as evidenced by their lower GDP estimate for the year.
This, Ibon’s Executive Director Jose Enrique A. Africa said, makes it even more imperative to help households and businesses in order to spur domestic demand and keep the economy afloat. It can be noted that the Philippine economy is consumption driven.
“Put money in people’s pockets to improve their welfare, increase their consumption but also spur domestic demand,” Africa said in a new briefing in Quezon City last Wednesday. “We completely believe in the role of the state in socioeconomic development.”
The support to poor families and MSMEs can be extended by the government by looking into the imposition of a wealth tax. Africa said the wealth tax, which targets the country’s 3,000 billionaires, would be able to generate at least P468.8 billion.
Contrary to the view of some economists, Africa said the wealth tax will not drive away billionaires since much of the wealth that can be taxed by the government are here in the country.
If it’s cash
THE Executive Director of the nongovernment think-tank said the cash assets of billionaires may already have been taken out of the country but other assets such as those in companies can be taxed. He also believed that these billionaires will continue to stay in the country despite a wealth tax since they are able to earn in a country with a market of 110 million Filipinos.
“These 3,000 billionaires, a large part of their wealth comes from valuation of their ownership in corporations,” Africa said. “A large part of their wealth is not prone to capital flight. Kung cash lang, pwede; but it’s probably there [foreign countries] already.”
He added that the government has the ability to monitor the wealth of these billionaires. They can even help encourage the billionaires to pay wealth taxes by promoting their corporate social responsibility efforts and other philanthropies.
Africa also said there are beginnings of a mechanism to push for wealth taxes, especially after the World Economic Forum (WEF) discussed it in 2019. He said that while these kinds of reforms take decades to come to fruition, the government should already start moving toward this.
One example of these kinds of reforms, Africa said, is the passage of the Anti-Money Laundering Act of 2001. The law allows authorities to flag significant single transactions or multiple large transactions in a span of a few days as these could be deemed unlawful transactions.
“Fundamentally, we disagree that a wealth tax would drive the money abroad. It’s going to generate money for socioeconomic development,” Africa stressed.
NONETHELESS, Africa admits that not all debts are bad. He said debts can be justified if these contribute to the country’s development.
One example, he said, is if the government borrows to finance projects that support agriculture. Recently, Africa said, it has been pointed out that cold storage facilities are actually lacking and contributed to the spike in onion prices.
If the country incurs large amounts of debt to finance “urban biased” infrastructure, this would not spur growth and development and only worsen inequality.
“Debt in itself is not necessarily a bad thing. If the debt is being used to help the economy grow that might be a short term cost for medium- to long-term development,” Africa said.
Earlier, the Cold Chain Association of the Philippines (CCAP) said it required at least P6 billion to double the industry’s storage capacity for onions and slash the disparity between the total supply annually and storage capacity.
CCAP President Anthony S. Dizon said the estimated capacity of cold storages dedicated for onions nationwide is about 100,000 metric tons (MT), which is only 27 percent of the annual 360,000-MT supply.
Dizon said cold storages for onions have a “unique” design and conditions to cater to the commodity, which entail high humidity and moderate air circulation (Full story here: https://businessmirror.com.ph/2023/01/24/expanding-onion-cold-chaincapacity-to-cost-%e2%82%a76b-group/)