Yellow Pad

By Filomeno S. Sta. Ana III


The lovely Cayetano is Pia, not Alan Peter.

Senator Pia Cayetano deserves praise for her consistency in fighting for the toughest social and economic reforms.

She is the tireless champion of health. Among the landmark laws identified with her are the following: the Responsible Parenthood and Reproductive Health Act (2012), the sin tax laws (2012 and 2019), the national health insurance law (2013), and the Universal Health Care Act (2019). It goes without saying that doctors and health professionals, women, people with disabilities, the elderly, the tobacco-control activists, and many others love Senator Pia for her health advocacy.

But we should not confine Senator Pia’s capacities and accomplishments to public health alone.  As current Chair of the Senate Ways and Means Committee, she is principally responsible for legislating tax reforms. This certainly is no easy task, and quite a few Senators shy away from tackling the current tax reform agenda to avoid an entanglement with powerful interests or with populist sentiments. But Senator Pia is different; she is tackling the bull by the horns.

What makes Senator Pia endearing is her quality of being determined and courageous to confront the most difficult, most controversial issues.

In 2012, Senator Pia was a decisive factor in the back-to-back passage of the bills on sin taxes and reproductive health. These were tough victories in the face of powerful lobbies — the tobacco industry’s resistance to higher taxes and the Catholic Church’s opposition to reproductive health. For example, the Senate ratified the 2012 sin tax bill by a hairline, a margin of one vote.

Recently, Senator Pia took up the cudgels for the beleaguered Philippine Health Insurance Corp. (PhilHealth). She introduced an adequate budget for its health technology assessment (HTA). The public has condemned Philhealth for chronic corruption, but the way to address systemic corruption is to enable PhilHealth, not weaken it. The appropriate strategy is to apply the rules found in the new law on universal health care, including the adoption of new technology and the institutionalization of HTA. Senator Pia fully understands this.

The HTA makes transparent recommendations based on scientific evidence and cost-effectiveness as to which drugs and vaccines, procedures and services, equipment, and other technologies that the Department of Health and Philhealth will finance and adopt. In this manner, the use of health technology is insulated from political and commercial interests.

Rougher terrain that Senator Pia has to navigate is the area of taxation and fiscal incentives.

Of late, too, the House of Representatives and the Senate quickly passed a bill granting an airport franchise to San Miguel Aerocity. The controversial part of the bill is its granting of all kinds of tax incentives to San Miguel Aerocity. Concerned parties, including Action for Economic Reforms, do not object to, and in fact welcome, the construction of a new commercial airport. But providing fiscal incentives is unjustified. There is no market failure regarding the availability and capacity of airports in mega Manila. The enhancement and expansion of existing airports will adequately supply the present and future demand of air passengers and air traffic. The San Miguel airport is thus a private good that competes with existing airports.   

Despite this economic argument and the lack of debate, no one in the Senate, except Senator Pia, stood up to question the hastily passed bill.

To quote Senator Pia, “I just like to put on record… that I really have not had enough time to study this. And the only reason I would like to contribute is because I’d like to avoid questions on its constitutionality, inconsistencies with different provisions, or confusions.” This is Senator Pia, defying the whole Senate and the overwhelming San Miguel lobby.

Indeed, the danger of having the San Miguel Aerocity fiscal incentives passed is that it runs counter to an essential objective of CREATE (Corporate Recovery and Tax Incentives for Enterprises), a bill that includes rationalizing  fiscal incentives.

CREATE, which Senator Pia is sponsoring, is encountering rough sailing in the Senate. Some Senators are introducing amendments that will weaken the bill.

Senators Frank Drilon, Imee Marcos, Richard Gordon, and Grace Poe, for example, want to have two separate bills — one for the fiscal incentives and another for the reduction of corporate income tax. The reason given by Senator Drilon is a lame one — that fiscal incentive rationalization is not a revenue measure! He and the few Senators fear the use of the line-item veto if rationalization of fiscal incentives is treated as a revenue measure. (A line-item veto applies to a revenue or appropriations bill.) One can surmise that some Senators want to include questionable provisions in the bill, which should indeed be subject to veto.

One egregious example of a proposed amendment from Senator Ralph Recto is the grandfathering of the fiscal incentives. This is to say that existing corporations will be exempted from the new rules and will thus continue enjoying the incentives in perpetuity. Another proposal, also from Senator Recto, is to have multi-tiered rates for corporate income taxation. This is most inefficient and is prone to tax evasion practices, like transfer pricing.

Senator Pia has expressed vigorously her objections to such proposed amendments. The Senate has voted against the amendment of Drilon et al to have a separate bill for the regime on fiscal incentives. And we do hope that the Senate will follow Senator Pia’s leadership in rejecting the other flagrant amendments.

We thus root for Senator Pia, the lovely Cayetano, and her allies in the Senate.

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