Condonation of farmers’ debts

A bill passed by Congress that aims to give debt relief to some 600,000 beneficiaries of the government’s land reform program awaits the signature of President Marcos.

If enacted into law, which would be dubbed “New Agrarian Emancipation Act,” it would condone P57.56 billion in unpaid debt, including interest, surcharges and penalties, incurred by Filipino farmers who till 1.17 million hectares of agricultural land.

Learning from the past when those beneficiaries were left to fend for themselves after they were given the land, which resulted in poor productivity (and in some cases, their leasing it to third parties), the bill also establishes a comprehensive support system for them.

When freed from debt, the farmers would be able to avail of credit facilities from banks and use their resources to acquire the farm implements and supplements needed to increase the yield of their land.

A similar program was proposed during the Duterte administration, but it did not even get to first base in Congress because of the opposition of the then economic managers.

They expressed concern about the adverse effects of the debt condonation to the economy as it would result in billions of pesos in lost revenues. That was textbook economic theory.

But that concern was not raised when, in 2019, Republic Act No. 11213 was enacted to grant a tax amnesty for a period of three years to the unpaid estate tax of people who died on or before Dec. 31, 2017.

(Incidentally, although the estate tax amnesty will end on June 14, Congress recently passed a bill that would extend it to 2025.)

Also in 2019, then President Rodrigo Duterte, through Executive Order (EO) No. 88, ordered the “reduction and condonation of real property taxes and interests/penalties assessed on the power generation facilities of independent power producers under build-operate-transfer contracts with government-owned or –controlled corporations (GOCC).”

According to the EO, the tax relief was necessary, otherwise the collection of taxes “will trigger massive direct liabilities on the part of such GOCC, thereby threatening their financial stability, the government’s fiscal consolidation … and may even trigger significant economic losses across all sectors.”

Then in 2020, at the height of the pandemic, Republic Act No. 11469 (or the “Bayanihan to Heal as One Act”) granted a tax amnesty until Dec. 31, 2020 for tax liabilities and delinquencies covering taxable year 2017 and prior years.

In all those acts of generosity, the economic managers had no qualms about losing or forfeiting billions of pesos in unpaid taxes and debt payments.

They probably believed the revenue losses were worth suffering because they would, in the long run, redound to the best interests of the country.

Until Congress approved the debt condonation bill, our farmers, in particular, the land reform beneficiaries, were not considered worthy or fit to be given financial relief like those earlier given to other sectors of our society.

Although late in coming, the bill is timely in light of the shortages in some food products that the country is going through at present.

That belated grant of debt relief brings to mind the influence that social or economic status plays in the treatment of Filipinos who, for one reason or another, fail or are unable to meet their debt obligations.

If the debtor comes from the D or E sector of our society, for example, small-scale farmers, he or she would likely be called “balasubas” (deadbeat) or “manunuba” (swindler).

And because of that character flaw, his or her assets would be immediately seized or garnished to satisfy the indebtedness. Never mind that if in doing so, his or her family would be reduced to penury.

But if the reneging debtor happens to be a prominent politician or business person who owes millions or billions in pesos, his or her failure to pay would be attributed to “poor business judgment” or “economic conditions beyond his or her control.”

Hence, under those circumstances, the debt deserves to be restructured or discounted and that he or she should be given the chance and helped to get back on his or her feet.

In a limited sense, the debt condonation bill would put its beneficiaries on the same footing as the latter kind of debtor with regard to getting a break from debt obligations. INQ

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