I Love Pinoys

Former National Economic and Development Authority (NEDA) Felipe Medalla said that contrary to claims made by critics, some of the President’s recent moves have helped Filipinos cope with record high inflation. These include an increase in income tax exemptions; a P1,500 subsidy to farmers and a “Food for School” subsidy program for families with children who attend public elementary schools.

“I believe if she can expand the provisional cash transfers program to the poor and not retreat on that, she will be doing the right thing,” he told ABS-CBN News Channel.

Medalla said the administration should not give in to pressure to remove the expanded value-added tax on oil, which brings in an estimated P73 billion in annual revenue.

“The effect of removing VAT will be minimal because fuel remains expensive anyway. That’s the only way we tax rich professionals and self-employed businessmen. I think if we give a tax break, it should be to salaried workers,” he said.

He said the recently enacted tax relief law would directly benefit wage earners who regularly pay their taxes.

In a separate interview, Albay Governor Joey Salceda said the President’s 8th State of the Nation Address (SONA) later Monday will touch on five points including:

1. Keeping the VAT at 12 percent
2. Moving from a balanced budget to deficit spending
3. Additional spending of up to P75 billion on social welfare programs
4. Focus on food security and rice self-sufficiency
5. Natural family planning as the government’s population growth policy

Salceda, who is one of the President’s economic advisers, said the “conditional cash transfers will be the core program” of government even as it works on providing jobs for the people.

Changing NFA mandate

Medalla said one move that the government should consider is changing the mandate of the National Food Authority from rice importation to food security.

He said that instead of government spending up to P120 billion for subsidized rice stocks, it should scale down the NFA mandate to procurement of rice buffer stocks to prevent food shortages. He said the savings could then be given as  additional subsidies for the poor.

“The poor won’t mind if rice prices go up if they’re getting P1,000-P1,200 a month,” he said.

Medalla said a “coalition” of various groups is keeping President Arroyo in power namely the Catholic bishops, the military, the congressmen and the governors. He said that although it is not part of the coalition, the strength of the capital market also keeps ouster moves against Mrs. Arroyo in check.

He also said that the government should consider softening its stand on the population debate and endorse artificial forms of contraception even if it earns the ire of the Catholic Church.

“We have to tell the bishops that the method will not be abortion. I think half of the bishops agree more or less with the layman here,” he said.

He said one way of implementing a population policy would be to incorporate it in the government cash subsidies program. He said poor families who avail of the subsidies should keep kids in school, get prenatal care and practice family planning.

He said managing population growth would result in a much more manageable population in five to six years, which could even lead to improved quality of education for the youth sector.

Salceda, however, said he doubts that the President would change her mind on the issue of family planning. “There are no surprises. She will probably say she’s Catholic and she endorses natural family planning,” he said.

Medalla said the government would get a “C-minus or D-plus average” for its efforts to help the poor. He also said that sound economic policies such as the abolition of the Oil Price Stabilization Fund and the passage of the -EVAT Law helped the Philippines to soften inflationary pressures brought on by high oil prices and a weak US economy.

“If we had an OPSF…and the VAT was not passed, we would have blood on the streets,” he said.

‘Mindanao also important’

Press Secretary Jesus Dureza appealed to critics to validate the President’s claims when she delivers her SONA before Congress Monday.

“She will tell you the numbers of hectares, the number of hectares irrigated, the number of bridges and how many kilometers of roads built. These are all validated,” Dureza told ABS-CBN’s “Umagang Kay Ganda.”

Dureza pointed out that Mrs. Arroyo has personally monitored the progress of government projects.

He said unpopular policy decisions such as the imposition of the value-added tax prepared the nation to weather the current crisis.

Asked if the latest breakthrough in the peace talks between the government and the Moro Islamic Liberation Front will be included in Mrs. Arroyo’s speech, Dureza said: “We don’t know yet in what language she will say it but Mindanao is very important to her.”

“The President is very focused on this. She wants to leave a legacy of peace for southern Philippines because it will also bring benefits not only for southern Philippines but for the whole country as well,” he said.