January 30, 2023

Xpat Pinoy

XPAT PINOY – World News for Pinoys

The government must spend more on social protection in 2023

If Filipinos will be able to chart the troubled waters of 2023, Ibon Foundation Inc. said the national government must increase social protections for households and micro, small and medium-sized enterprises (MSMEs) nationwide this year.

The headwinds the global and local economy is facing this year have already been spearheaded by multilateral agencies, corporations, NGOs and even the government, as evidenced by their lower GDP estimate for the year.

This makes it even more important to help households and businesses to boost domestic demand and keep the economy afloat, said Jose Enrique A. Africa, executive director of Ibon. It can be stated that the Philippine economy is consumption-driven.

“Putting money in people’s pockets to improve their wealth, increase consumption, but also boost domestic demand,” Africa said in a new briefing in Quezon City last Wednesday. “We firmly believe in the role of the state in socio-economic development.”

Government support for poor families and MSMEs can be expanded by considering levying a wealth tax. Africa said the wealth tax targeting the country’s 3,000 billionaires could bring in at least 468.8 billion pesos.

Contrary to some economists’ view, Africa said the wealth tax will not drive away billionaires because much of the wealth that can be taxed by the government is here in the country.

When it comes to cash

The executive director of the non-governmental think tank said billionaires’ cash wealth may already have been evacuated from the country, but other assets, such as those in businesses, may be taxed. He also believed that despite a wealth tax, these billionaires will continue to stay in the country because they can make money in a country with a market of 110 million Filipinos.

“These 3,000 billionaires, a large part of their wealth comes from valuing their ownership of companies,” Africa said. “A large part of their wealth is not vulnerable to capital flight. Kung cashlang, pwede; but it’s probably there [foreign countries] already.”

He added that the government has the ability to monitor the wealth of these billionaires. You 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 wealth taxes, particularly after the World Economic Forum (WEF) discussed it in 2019. He said that while these kinds of reforms will take decades to materialize, the government should start moving now.

An example of this type of reform, Afrika said, is the passage of the 2001 Anti-Money Laundering Act. The law allows authorities to flag significant single transactions or multiple large transactions within a few days, as these could be viewed as illegal transactions.

“Basically, we disagree that a wealth tax would drive money abroad. It will generate money for socio-economic development,” Africa stressed.

finance agriculture

STILL, Africa admits that not all debt is bad. Debts are justified if they contribute to the country’s development.

An example, he said, is when the government borrows to fund projects that support agriculture. Recently, Africa says, it has been pointed out that cold storage is in fact missing, which has contributed to the rise in onion prices.

If the country incurs large debts to fund “urban-centric” infrastructure, this would not boost growth and development and would only exacerbate inequality.

“Debt itself is not necessarily a bad thing. If the debt is used to support economic growth, it could be a short-term cost to mid- to long-term development,” Africa said.

Earlier, the Cold Chain Association of the Philippines (CCAP) said it needs at least P6 billion to double the industry’s onion storage capacity and narrow the gap between total annual supply and storage capacity.

CCAP President Anthony S. Dizon said the estimated capacity of statewide cold storage facilities for onions is about 100,000 tonnes (MT), which accounts for just 27 percent of the 360,000 tonnes annual supply.

Dizon said onion cold stores have a “unique” design and conditions to accommodate the commodity, which involves high humidity and moderate airflow (full story here: