Corruption—A Social & Moral Cancer (2)

Corruption–A Social & Moral Cancer (1)


The administration’s “Katas ng VAT” is a pretense to cover up how the largest part of reformed value-added tax (RVAT) revenues do not go to social programs but rather to paying off debt, militarism and political patronage to prop up Pres. Gloria Arroyo’s unprecedented unpopular rule.

The so-called pro-poor subsidies also do not mean any lasting effect for the people who suffer record joblessness, rising prices and worsening poverty.

The government deceitfully lumps together the share of social services with infrastructure in RVAT revenues when it reports on the share going to social programs to make these appear larger than the reality. The government claims that 40% of RVAT revenues in 2008 will go to “social services and infrastructure” but it is still unclear how much will really go to social programs.

For instance the Department of Finance said that, in 2006, “30% or P23.5 billion (of additional RVAT revenues) went to social and infrastructure expenditures”. However the actual amount that went to social services was just P8.4 billion: health programs (P2.7 B), resettlement and housing programs (P2 B), educational & training programs (P1.9 B), hunger mitigation programs (P1.8 B). This means that only 11% of additional revenues from RVAT went to social programs.

The administration’s lack of concern for social programs is even underscored by how it is not even using the whole amount of windfall RVAT revenues due to high oil prices for supposedly “pro-poor” programs. Based on the administration’s announcements on the “Katas ng VAT” so far, only P9.3 billion or just half of the estimated P18.6 billion in windfall RVAT revenues is going to subsidies. This leaves another P9.3 billion unaccounted for inasmuch as another P2 billion in “subsidies” that had been hyped are merely loans that still have to be repaid.

Indeed, the administration has yet to fully explain where its massive windfall RVAT revenues are going which can only stoke suspicions that this is going to corruption and building a political war-chest for the 2010 elections or even a renewed Cha-Cha campaign.

In contrast the administration still insists, in the face of the people’s worsening problems, on allotting some 24% of the national budget to interest payments on debt. The government is paying P634 billion in total debt service in 2008 covering interest and principal payments. Pres. Arroyo also said earlier this month that the government is using RVAT revenues to “finance much of (the military’s) modernization” and that it “has been able to set aside billions of pesos for the purchase of new helicopters”. The Capability Upgrade Program (CUP) of the Armed Forces of the Philippines (AFP) alone already has P5 billion allotted for it this year even as the economic plight of the people is more urgent.

The Arroyo government is running out of excuses to justify the continued imposition of the VAT on socially sensitive products such as oil. Pres. Arroyo has to heed to the people’s clamor to remove the VAT if she wants to reverse the perception that her SONA speeches is a simply a litany of meaningless promises.


Research group IBON Foundation welcomes the initiative of the Supreme Court to improve the poor’s access to justice through its nationwide summit today. However, it said that the country’s economic policies have the most far-reaching harmful impact that should be addressed beyond judicial review.

For one, existing judicial remedies are extremely limited in addressing the far-reaching economy-wide violations of human rights. This is aside from how nominally the Commission on Human Rights (CHR) recognizes economic, social and cultural rights matters as part of its mandate to monitor government’s compliance with international obligations, such as the International Covenant on Economic, Social and Cultural Rights (ICESCR).

There also seems to be no concrete measures to apply the human rights approach to poverty reduction. For instance, the country has no official procedure that will assess economic policies according to an explicit economic, social and cultural rights framework. It also does not have specific mechanisms by which policy-makers can be held accountable for the effects of trade, investment and fiscal policies on human rights. Even the CHR does not have a monitoring of how economic, social and cultural rights are affected by macroeconomic policies, which have the broadest influence on realizing these rights.

As a result, the judiciary generally gives in to the Executive and Legislature on major economic policy decisions that are deemed unconstitutional, such as the Mining Act, Oil Deregulation Law, EPIRA etc., even as it is equally responsible for upholding constitutional guidelines.

IBON strongly recommends that the judiciary establish a legal framework wherein existing laws, rules, procedures and practices can be modified to conform with the ICESCR and the Philippine Constitution. Based on this, the SC should conduct a formal review to check if the country’s foreign trade and investment policies are consistent with its human rights obligations, and implement measures that will put these economic policies to public scrutiny.

Lasty, measures should be placed to ensure that the country’s main economic planners, trade negotiators, and lawmakers are fully aware of their obligations and commitments under the Covenant in crafting socioeconomic policies.


One more child out of every 10 school-age children was not able to go to school, highlighting the need for higher government spending in social services, said research group IBON Foundation.

Figures from the Department of Education (DepEd) show that participation rate at the elementary level, or the percentage of children aged 7-12 who are enrolled in public and private elementary schools, has fallen from 96.95% in SY 1999-2000 to 83.22% in SY 2006-2007. At the secondary level, only 58.59% of children aged 13-16 were enrolled in high schools in SY 2006-2007 from 65.43% in SY 1999-2000.

These figures highlight the need for government to allocate more resources for social were ditional penditure) espectively7.s, 17 out of e of rising cost of livingh is way below int quality stdsservices spending. The 2008 national budget allocated just over P2,000 per Filipino for education, 14% less in real terms than what was allocated in 1998. For health services, another important social service, only P253 was allocated per Filipino, which was 28% less in real terms than what was allocated in 1997.

Such services should be prioritized over the paltry subsidies the Arroyo administration has been using recently to win popular support from the poor. It recently allocated some P2 billion to provide four million poor families a one-time P500 electricity subsidy, and promised other subsidies such as loans for poor students. However, its education spending is only 12% of public expenditure and 2.1% of the gross domestic product. These are way below the international quality standards of 22% (for public expenditure) and 6% (for GDP).