The problem is where to source the money, which current domestic resources and aid commitments could not cover. Not surprisingly, Department of Finance (DOF) Secretary Margarito Teves announced that they will tap the global bond market again in order to raise funds for relief and rehabilitation of Ondoy victims. This would be the third round of global bond issuance for the Philippine government this year, after the $1.5-billion bond sale in January and the $750-million sold in July, and would come ahead of the scheduled Samurai bond issuance later in the year.
Meanwhile, at the House of Representatives, proponents of the tax on text messaging used the devastation caused by Ondoy and Pepeng and the need to raise revenues for relief and rehabilitation to renew their highly unpopular proposal. The House ways and means committee proposed last October 6 an P0.80-tax per text message, higher than the original proposal of P0.50.
Milking the Flood Victims
But imposing additional taxes and increasing the country’s foreign debt in order to raise revenues for victims of Ondoy and Peping will only create more problems for ordinary Filipinos, including those directly affected by the typhoons. Additional taxes on consumers, especially amid massive economic dislocations caused by Ondoy and Pepeng, on top of the jobs and livelihoods devastated by the still raging global financial and economic crisis, is simply, completely unacceptable. As argued in a previous article, there is no need for additional onerous taxes if government intends to raise revenues.
At a time of grave calamity such as Ondoy and Pepeng, government should even lift certain taxes in order to facilitate the flow of resources to immediately aid the people affected. A case in point is the “donor’s tax.” At present, only cash donations that go to the DSWD are tax-free while cash donations to privately-led groups conducting relief efforts for Ondoy victims are charged with taxes of two to 15% for donations worth P100,000 to P10 million, according to the Bureau of Internal Revenue (BIR).
It is unconscionable that the Arroyo administration, which has been widely criticized for neglect and incompetence in dealing with the devastation of the worst tropical storm to hit Metro Manila and adjacent provinces, will still partake a significant portion of funds intended for flood victims.
Many relief and emergency aid are usually channeled through nongovernment groups, which in most cases are more prompt and efficient than government in relief operations for disaster and calamity victims. Take the case of official development assistance (ODA) for emergency and distress relief in the Philippines, of which only 5% of the cumulative 2005-2007 amount was committed to the public sector.
Note also that government collections from donor taxes are on top of the billions of pesos it collects through the 12% value added tax (VAT) imposed on basic items commonly distributed to disaster victims such as canned goods, noodles, medicine, etc. In the wake of Ondoy and Pepeng, government should at least be sensitive in these times of extreme difficulties facing the country and stop collecting these taxes. It does not help that corruption and wasteful spending have persisted throughout the term of the Arroyo administration, further making the imposition of taxes more onerous and oppressive for the Filipino people.
Drowned by Debt
Meanwhile, instead of borrowing more which will only aggravate the country’s debt problems, the more sensible step would be for government to cancel debt payments to free up billions of pesos in public funds that can be used for disaster relief and rehabilitation in the immediate, and provide much needed social services in the medium and long-term.