Yellow Pad

For porn lovers, XXX or triple X stands for hardcore sex. But for the religious, XXX can symbolize three crosses.

I lean towards the religious, but XXX has a different meaning for me, other than crosses. I have a friend whose nickname is X — not for ekis (or Madrax, an addictive and risky depressant, which my generation used to pop). His given name is Francis Xavier; hence the nickname X.

The original Francis Xavier is the cofounder of the Society of Jesus or the Jesuits. In the Philippines, the Jesuits who were expelled from China founded Xavier School (XS).

So X is for Xavier, and triple X stands for three Xaviers. Specifically, I write about three alumni from XS who are in a position to shape the economic future of our country. The three alumni are Department of Finance Undersecretary Karl Kendrick Chua (XS ’96), Representative Dakila “Dax” Cua (XS ’95), and Senator Juan Edgardo “Sonny” Angara (XS ’89).

Messrs. Chua, Cua, and Angara are all deeply involved in the crafting of a comprehensive tax reform package dubbed as Tax Reform for Acceleration and Inclusion or TRAIN. Finance Secretary Dominguez has assigned Undersecretary Chua the twin tasks of technically designing the TRAIN package and having this passed in Congress. Representative Cua is the Chair of the Ways and Means Committee of the House of Representatives and is responsible for the passage of the House version of TRAIN. Senator Angara is the Chair of the Ways and Means Committee in the Senate, and is the principal author of the Senate bill on TRAIN.

TRAIN intends to rectify the fundamental weaknesses of the tax structure and make it fairer, efficient, and progressive. It desires to provide personal income tax relief especially for the fixed-income working classes. It wants to rationalize the value-added tax, which suffers from too many unnecessary exemptions. Removing the VAT exemption on many nonessential lines is a way of plugging the tax leakage and hence improving tax administration. TRAIN also adjusts the excise taxes on fuel and automobiles to correct for inflation and to shift the tax burden to those with a higher ability to pay.

TRAIN is necessary to fund expanding programs for education, health, infrastructure, and social protection.

To illustrate, the recently legislated controversial free college education requires P51 billion for its first year of implementation. A forthcoming law on universal health care (the House of Representatives has passed the bill) will require annual spending of more than P65 billion for the medium term. The said amount is necessary to achieve the last mile in health insurance coverage (that is, all Filipinos having health insurance), broaden the coverage of PhilHealth benefits to include primary care, and increase the value of services and substantially reduce the out-of-pocket health expenses particularly of the poor. On top of all this is the bigger amount to repair and modernize infrastructure.

TRAIN is a necessary condition for the country to break out of the middle-income trap. The country needs sustained, robust revenues. This will help achieve the people’s dreams, as articulated in AmBisyon 2040, a reality — eliminating absolute poverty and enlarging a prosperous middle class. It is an investment in the future for nation-building, for strengthening institutions.

Mssrs. Chua, Cua, and Angara, or the XXX, have a role in sustaining the economic and welfare gains for the medium term and in the transformation of the country for the long term. The House version, despite the compromises, passed an acceptable version. It is still consistent with the essential objectives and features of the original TRAIN. For this, Representative Cua and his colleagues in the House deserve credit for cooperating with Finance Secretary Dominguez and Finance Undersecretary Chua. The Jesuit boys did good. (Mr. Dominguez is an alumnus of the Ateneo system.)

Sadly, the TRAIN is in danger of being derailed in light of the watered-down version that the Senate has passed.

The Senate version does not correct the structural problems of the tax system, by still having many exempted items for the value-added tax (VAT) and by allowing a lower increase in fuel excise tax rates that fall short of inflation adjustment. The weakness in structure leads to less revenues, thus adversely affecting the financing of the country’s development program. The revenues to be raised from the Senate version will not even be enough to fund the social protection measures such as the cash transfers for the poor and near-poor households. The failure of the Senate to reform the tax structure is essentially a capitulation to those with vested interests in the economic zones, free ports, and real estate and a surrender to irresponsible populism.

Different stakeholders from economics, business, finance, health and other fields have criticized the Senate version.

For an incisive criticism of the Senate version, see the column written by former Economic Planning secretary Solita Collas Monsod, titled “‘Papa Bear,’ ‘Mama Bear,’ ‘Ice Queen (Philippine Daily Inquirer, Dec. 2, 2017).’”

The views written by Prof. Monsod mirror the positions of other leaders including former Finance secretary Gary Teves, former Finance secretary Ernest Leung, former Health secretary Paulyn Jean Ubial, former Health secretary Esperanza Cabral, Philippine Institute for Development Studies President Gilbert Llanto, former Finance undersecretary Romeo Bernardo, Financial Executives Institute of the Philippines President Benedicta Du-Baladad, Academician Antonio Dans, M.D., et al.

The stakeholders representing the public interest want the bicameral conference committee, which will reconcile the conflicting version of the House of Representatives and the Senate, to assert the good version of TRAIN. Here, we hope XXX will steer the decision at the bicameral conference away from protecting vested interests towards promoting the public good.

Those educated by the Jesuits are proud of being men and women for others. The term “for others” refers to the poor and the downtrodden. Those from XS the XXX, have a deep understanding of being men for others. Their Jesuit mentors, booted out of Communist China, were on a mission to have their students imbibe the Ignatian values of service and sacrifice.

Karl Chua exemplifies the values. He already had a comfortable job with the World Bank, but he opted to join government in spite of the personal difficulties. For Karl sees government service as a more meaningful way of serving country and people for the greater glory of God.

Jesuits are fond of light. Ateneo de Manila’s motto is Lux-in-Domino — Light in the Lord. XS’s motto is Luceat Lux — Let your light shine. We hope XXX will beam the light for the reforms and eliminate the darkness that overshadows the Senate version of TRAIN.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

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