Subsidy for the marginalized

Barring any hitches, the Duterte administration’s proposed comprehensive tax reform program, dubbed “Tax Reform Acceleration and Inclusion Act” under House Bill No. 5636, may be approved by Congress before the end of the year.

The President would likely certify as urgent the bill earlier approved by the House of Representatives when it is brought to the Senate for deliberation.

The bill aims to reduce personal income tax rates, remove revenue-draining tax exemptions, and impose new or additional taxes on certain products and services.

If enacted into law, these taxes are expected to substantially increase the prices of basic commodities and transportation costs and, in the process, further erode the purchasing power of our peso.

To mitigate the adverse effects of the spike in prices on the marginalized sectors of our society, the administration plans to give subsidies, such as conditional cash transfers for the poorest families and public utility operators.

In line with this objective, the administration is also pushing for the enactment of a law that would establish a national identification (ID) system for all Filipinos.

Although the ID system is primarily implemented for security purposes, the Department of Finance (DOF) is positioning it also as an instrument for financial alleviation.

The DOF’s game plan is for the ID cards to be issued first to senior citizens and persons with disabilities, and then to the members of the poorest households who are not yet covered by the existing conditional cash transfer program of the Department of Social Welfare and Development, more popularly known as the Pantawid Pamilyang Pilipino Program or 4Ps.

They will be the first in line to receive financial assistance that would be sourced from the billions of pesos in revenues that the government anticipates it will be able to generate from new or additional taxes.

There is no question that the marginalized sectors of our society deserve to be given or are entitled to a financial lifeline in case the administration’s revenue collection program takes effect.

But is the planned subsidy a fair and effective way to make life more bearable for their intended recipients?

By whatever name it’s called, cash transfers are, plain and simple, doleouts.

Money will be given on account of age, physical condition or financial standing.

There is no obligation on the part of the recipients to do or give something in return for the money.

At least in the case of the 4Ps, something is done by its beneficiaries in exchange for their monthly allowances.

The heads of the families are obliged to see to it that their children attend school regularly under pain of losing that grant.

But this monthly allowance has a downside: Many of the beneficiaries lost the initiative to seek other means of livelihood to augment their income. Why work your butt off looking for or doing odd jobs when free money is made available by the government?

Mendicancy became profitable.

To date, only broad strokes have been heard from the proponents of the proposed tax reform program on how they plan to distribute the doleouts to the people who, by their admission, will suffer most from the new and additional taxes.

How much will be given to them and for how long? What mechanisms or safeguards would be put in place to ensure that only the deserving receive the doleouts and that the program would not be abused?

Lest we forget, the money would come from taxpayers’ pockets.

The saying “don’t count your chickens before they hatch” aptly applies to this situation. There is no assurance that the planned changes in the country’s revenue collection would result in billions of pesos in additional revenues.

In law making, the best of intentions often do not translate to reality.