Subsidy is a good social policy; corruption and fraud are privileges of the rich and powerful

News Release

December 26, 2014

The labor group Partido Manggagawa (PM) supported the view of Senator Allan Peter Cayetano that unless trillions of pesos of lost revenue due to smuggling, tax evasion and official corruption is plugged, the removal of MRT/LRT subsidy is painfully and socially unjust. 

“Subsidy is a good social policy.  It is a right, an entitlement of poor people while corruption and fraud are privileges enjoyed by the rich and powerful.  By removing the subsidy, the government is renouncing  a good policy,” said PM spokesman Wilson Fortaleza.

Quoting the World Bank, Cayetano said in every P1 collected by the government, P2 remain uncollected. This is estimated to be between P2 to P4 trillion of lost revenue or bigger than the recently approved budget of P2.6 trillion.

The Senator said he will take up this issue next year amid the plan by the government to remove government subsidy to the metro rail system. The plan will double the MRT and LRT fares beginning January 4. 

The labor coalition Nagkaisa in which PM is a member will be meeting next week to draw up plans against the impending fare hike.

Fallacy

Fortaleza said removing the P7-P10 billion annual train subsidy to free up money for other social services is a fallacious argument, saying the poor, who are entitled to government subsidy in varying degrees, should not, by class or geographical locations, be pitted against each other.

“This is comparable to the fact that businesses across all industries also enjoy billions of pesos of subsidy in the forms of tax holidays, financial assistance, free repatriation as well as import and export privileges.  For instance the power industry, the most lucrative business in the country today, received a total of P5.2 billion of subsidy in 2012, according to the 2012 Census of Philippine Business and Industry,” said Fortaleza.

Fortaleza reiterated his group’s position that it is more productive to provide annual subsidy to the estimated 500 million rides of blue collar workers and students who utilize the trains regularly than the luxurious lifestyles of 500 public officials.

Revenue and job loss

The labor group likewise bewailed the huge revenue losses coming from tax evasion and smuggling, saying the failure to address this age-old problem created a ‘pass-on’ culture in public policy. 

“This is the reason why the burden shifted heavily to indirect taxes like VAT and taxes withheld from wage earners.  At the same time smuggling creates abundance of cheap imported goods at the detriment of local producers.  And now the removal of subsidies,” lamented Fortaleza.

Fortaleza added that smuggled goods have no local labor component, which is both a revenue and job loss to Filipinos. ###