Proposed Senate Bill 2021-1 (Tax Reform Act for the Masses and the Middle Class/TRAMM)

Proposed Senate Bill 2021-1

TAX REFORM ACT FOR THE MASSES AND THE MIDDLE CLASS (TRAMM)

Explanatory note:

As poverty thresholds in the Philippines are notoriously low, the actual number of poor Filipinos is understated. Segments of those classified in government databases as low-income-but-not-poor or middle-income households are actually poor, especially if multidimensional perspectives on poverty will be used as metrics.

The establishment of a progressive tax system – a declared State policy in the Philippine Constitution – could help achieve the goals of redistributing wealth among broader segments of the population, by shifting the tax burden away from personal incomes/compensation & poor and middle-class consumption, and towards corporate income and wealthy people’s expenditures.

Unfortunately, past tax “reform” laws – namely, TRAIN and CREATE – offered little benefits to poor and middle-class families while giving away further bonanzas for the very wealthy few. As a result, the Philippines remains among the most unequal/inegalitarian societies in the world, with the income shares of the poorest and richest segments of the population almost stagnant for decades now.

This proposed “Tax Reform Act for the Masses and the Middle Class (TRAMM)” would help address such imbalance, in favor of poor and middle-class households in the country that bear most of the tax burden but are unable to reap benefits from the economic system, while the richest clans gobble up much of the wealth that the former have mostly created.  

~~~

Be it enacted by the Senate and House of Representatives of the Philippine Congress assembled:

Section 1. Short Title. This Act shall be known as the “Tax Reform Act for the Masses and the Middle Class (TRAMM).”

Section 2. Declaration of Policy. The Philippine Constitution’s declared policy on progressive taxation (Article VI, Section 28) and the goals of the national economy towards a more equitable distribution of opportunities, income, and wealth (Article XII, Section 1) are hereby reiterated and implemented.

Section 3. Maximum Personal Income Tax Rate. The maximum personal income tax rate is hereby capped at 15% of the taxable income.

Section 4. Progressive Personal Income Tax Rate. The Bureau of Internal Revenue shall release an updated progressive personal income tax schedule with rates ranging from 1% to 15% of the taxable income.  

Section 5. Personal Income Tax Exemption. The first 500,000 pesos of every citizen’s individual income is exempted from the personal income tax.

Section 6. Tax-Free Status of 13th Month Pay. Every citizen’s 13th month pay below the amount of 120,001 pesos is hereby exempted from any tax.

Section 7. Additional Exemption. Subject to the law’s implementing rules and regulations, the following citizens can apply for additional exemption at 25,000 pesos per instance: a) qualified dependent child and/or adoptee (capped at 5 children and/or adoptees); b) benefactor of a senior citizen – a parent or relative – with no pension or who is just receiving the basic social pension (capped at 2 per taxpayer).

Section 8. Value-Added Tax (VAT)-Exempt Transactions. On top of current exemptions, the following transactions shall be also exempt from VAT:

  1. Purchase of all food items (except junk foods, soft drinks and other similar products to be listed in the implementing rules and regulations), medicines, and utilities for household use such as water, electricity, and internet;
  2. All first home purchase – house and lot, residential condominium or any similar housing unit – of every citizen;
  3. Lease of a residential unit with a monthly rental not exceeding 20,000 pesos;

Section 9. Regular Corporate Tax Rates. The regular corporate tax rate for large corporations is hereby restored to 30%, and retained at 20% for small businesses.

Section 10. Special Corporate Tax Rate Reduction for Profit-Sharing Firms. Large corporations and small businesses can apply for a special 5% reduction in the applicable regular corporate tax rate, provided that they establish and implement a functioning profit-sharing mechanism in favor of their workers/employees, subject to annual application and approval by BIR and DOLE.

Section 11. Minimum Corporate Income Tax Rate. The minimum corporate income tax rate is hereby restored to 2% for domestic and resident foreign corporations.

Section 12. Final Tax on Sweepstakes and Lottery Prizes. The final tax on sweepstakes and lottery prizes above 1,000,000 pesos is now pegged at 20%.

Section 13. Improperly Accumulated Earnings Tax (IAET) Rate. The IATET is hereby restored to 10% of net taxable income.

Section 14. Cash and Property Dividend Tax. The following rates are hereby implemented:

  1. For an individual shareholder who is either a Filipino citizen or alien resident of the Philippines, cash and property dividends received are subject to a final withholding tax rate of 12%
  2. Cash and property dividends received by another domestic corporation or by a resident foreign corporation shall be subject to a 20% tax.        

Section 15. Tax on Stock Trade Transactions. The following rates are hereby implemented for transactions beyond 100,000 pesos:

  1. 2% sales tax on gross selling price
  2. 1% stock buyer’s tax on gross purchase price
  3. Double the regular rates for transactions beyond 1,000,000 pesos
  4. Triple the regular rates for transactions beyond 1,000,000,000 pesos

Section 16.  Progressive Estate Tax Rate. The progressive estate tax rate ranging from 5% to 20% is hereby restored for every estate worth 3,000,001 pesos and above, while an estate worth below 3,000,001 pesos will be exempted from the estate tax.

Section 17. Withholding Tax on Interest Earned From Local and Foreign Currency Deposits. Tax on interest earned beyond 100,000 pesos (or its foreign currency equivalent) shall be pegged at 25%.  

Section 18. Citizenship Milestone Cash Awards. On top of existing programs and grants, a special one-time cash payment will be given to every citizen who reaches the following milestones:

  1. For every citizen who reaches 18 years of age: 500,000 pesos, provided that he/she has registered to vote, is enrolled in or was able to complete senior high school studies, to be retroactively implemented from 2014 onwards.
  2. For a citizen seeking to buy his/her first home: 500,000 pesos or 20% of the total contract price (whichever is higher) upon signing of the contract to sell, to be retroactively implemented from 2000 onwards;
  3. For an agrarian reform beneficiary: 500,000 pesos or 20% of the total assessed value of the land awarded (whichever is higher) upon receipt of CLOA or any similar document, to be retroactively implemented for all land reform beneficiaries and/or their direct heirs from 1988 onwards.
  4. 250,000 pesos for every citizen who reaches 60 years of age, provided that he/she has worked in the country for at least 15 years and is projected to receive only a pension equivalent to any amount below the maximum SSS monthly pension upon retirement, to be retroactively implemented from 2000 onwards (not for heirs).
  5. 250,000 pesos for every citizen who reaches the mandatory age of retirement, provided that he/she has worked in the country for at least 15 years and that he/she will be receiving only a pension equivalent to any amount below the maximum SSS monthly pension, to be retroactively implemented from 2000 onwards (not for heirs).
  6. Subject to the consultation with concerned groups and individuals, those tasked with writing the implementing rules and regulations of this law will devise a cash award similar to 4 and 5 for those not employed in the formal sector.

Section 19. Implementing Rules and Regulations. The Bureau of Internal Revenue and the Department of Labor and Employment will lead the crafting of the IRR which will be finalized with the help of concerned groups such as consumer advocacy groups, labor unions/federations, NGOs, people’s organizations, civil society organizations and the like, within 100 days after the president has signed the law.

Section 20. Separability Clause. If any of the sections or provisions of this Act is held invalid, all the other provisions not affected thereby shall remain valid.

Section 21. Repealing Clause. All laws, decrees, orders, resolutions, instructions and rules and regulations or parts thereof which are inconsistent with this Act are hereby deemed repealed or modified accordingly.

Section 22. Effectivity.  This Act shall take effect 15 days following its complete publication in the Official Gazette or in at least one (1) newspaper of general circulation.

Further readings:

This article features a short critique of official poverty statistics, and emphasizes that poor and middle-class households’ budgets are heavily taxed (e.g. VAT on their typical expenditures on food and utilities): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3571402

News on US Treasury Secretary’s call for a global minimum corporate tax: https://apnews.com/article/janet-yellen-minimum-global-corporate-income-tax-0a839a4705566a8b9f8bd5411bfe62d5

IBON Foundation’s critique of the corporate tax reduction in the Philippines: https://www.ibon.org/duterte-govt-giving-up-php667-b-in-potential-covid-response-funds-to-boost-corporate-profits/

On the necessity of higher corporate tax, tax on wealth, and cash grants to combat inequalities, Thomas Piketty’s books Capital in the Twenty-First Centuryand Capital and Ideology are instructive  

A European study that proves “Reducing VAT rates drives down prices and boosts demand”: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/study_reduced_vat.pdf

News article on IMF’s recent call for a tax on wealth: https://www.theguardian.com/business/2021/apr/07/imf-wealth-tax-cost-covid-pandemic-rich-poor

Sen. Sonny Angara’s article on the Philippine middle class’ over-taxed situation: https://opinion.inquirer.net/77762/overtaxing-working-middle-classes

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Quick Literature Preview on COVID-19 Mass Testing and Contact Tracing: Lessons for Philippine Policymakers

Experts are united in emphasizing that the most basic weapons to help control (if not eradicate) the pandemic include mass testing and contact tracing.

Experts are also united in pointing out that the Philippines is far from achieving ideal mass testing goals and lacks an effective and unified contact tracing system.

Vaccination is important but no panacea for the pandemic. Even if all Filipinos were to be vaccinated in the next few months, mass testing and contact tracing would have to be maintained.

Hence, this quick literature preview (rather than review; as this note features mostly direct quotes from researches) is aimed at providing a summary of practical insights and/or recommendations culled from mostly peer-reviewed literature on mass testing and contact tracing – to help our policymakers “science the shit out of this” so to speak. All emphases are supplied.

“Bidirectional contact tracing could dramatically improve COVID-19 control” (Bradshaw et al., 2021)

  1. “…‘bidirectional” tracing to identify infector individuals and their other infectees robustly improves outbreak control…”
  2. The greatest gains are realised by expanding the manual tracing window from 2 to 6 days pre-symptom-onset or, alternatively, by implementing high-uptake smartphone-based exposure notification… 
  3. Hybridizing manual tracing with digital may offer an alternative path to high performance. In practice, almost no jurisdiction is proposing to exclusively control COVID-19 through digital exposure notification, but rather to supplement traditional manual tracing with digital tools. The two methods have complementary strengths and weaknesses: digital tracing is fast, scalable, and could be easily adapted to trace bidirectionally, but is highly fragile to network fragmentation; manual tracing is slower and more labor-intensive, but more robust. A hybrid of the two approaches might thus outperform either approach used in isolation.”

“Impact of delays on effectiveness of contact tracing strategies for COVID-19: a modelling study” (Kretzschmar et al., 2020)

  1. “…a contact tracing strategy will only contribute to containment of COVID-19 if it can be organised such that delays in the process from symptom onset to isolation of the index case and their contacts are very short…Reducing delay in testing individuals for SARS-CoV-2 should be a key objective of a contact tracing strategy…
  2. “For example, walk-in or drive-in testing facilities could be set up on a large scale and test results immediately communicated via the tracing app.”

“Modelling the impact of testing, contact tracing and household quarantine on second waves of COVID-19” (Aleta et al., 2021)

  1. “a period of strict social distancing followed by a robust level of testing, contact-tracing and household quarantine could keep the disease within the capacity of the healthcare system while enabling the reopening of economic activities. Our results show that a response system based on enhanced testing and contact tracing can have a major role in relaxing social-distancing interventions in the absence of herd immunity against SARS-CoV-2.”

“Why Contact Tracing Efforts Have Failed to Curb Coronavirus Disease 2019 (COVID-19) Transmission in Much of the United States” (Clark et al., 2020)

  1. Reasons “why contact tracing efforts have failed to curb” the pandemic in “much of the United States” include: “A LACK OF NATIONAL COORDINATION” and “INADEQUATE TESTING SUPPLY”
  2. “Larger numbers of staff may be necessary as social distancing measures are loosened (or public adherence decreases) and case counts increase, or if technologic tools are not used for augmentation. Smaller numbers of staff would likely be necessary if local, state, and national public health agencies were able to communicate and coordinate effectively. Creation of a national contact tracing system could eliminate geographic restrictions for hiring and would increase procedural standardization.”

“Successful find-test-trace-isolate-support systems: how to win at snakes and ladders” (Rajan et al., 2020)

  1. Isolation is arguably the most important part of the test, trace, isolate process according to recent evidence. A team of community volunteer contact tracers in the UK published data  from a pilot in which it took approximately 80 minutes to manage each case, with many contacts were unwilling to isolate…Measures to support isolation are therefore an important ladder and in Denmark, Finland and Lithuania, people who cannot isolate are accommodated elsewhere… The same approach has also been used successfully to prevent outbreaks in care homes in South Korea. Without facilities to support vulnerable individuals to isolate, and especially to minimise any loss of income, it is likely that transmission will rise, another snake that could set back the entire process.”

“An Empirical Argument for Mass Testing: Crude Estimates of Unreported COVID19 Cases in the Philippines vis-à-vis Others in the ASEAN-5” (Cruz, 2020)

  1. …the empirical estimates buttress the argument that the mere extension of the lockdown without complementary mass testing is impractical…the inevitable policy direction for the Philippines is to aggressively implement the WHO recommendation of “test, trace, and isolate” to avoid long-term health and economic distress.

Other Commonsensical Ideas Worth Trying:

  1. Offer full wage/salary subsidy – from diagnosis until full recovery – to workers who will test positive to encourage people to undergo testing.
  2. In the duration of the ECQ, offer full wage/salary subsidy for workers in the NCR Plus areas to encourage those in industries allowed to operate with skeletal workforces to take a break and stay at home.
  3. In the duration of the ECQ, offer living income subsidy for informal economy workers (especially ambulant vendors and the like) to encourage them to stay at home.  
  4. Swiftly build makeshift hospitals for COVID-19 patients in NCR Plus areas and other areas where hospital occupancy rates are nearing 90%
  5. To expand health care workforce, train auxiliary health workers and offer all public health workers double pay at least during the pandemic.
  6. In the duration of the ECQ (and even better, beyond the ECQ), ban all international and domestic air travel – except for essential workers (nurses, doctors etc.) and offer full wage subsidy for affected workers

P.S. Yes, these are costly measures but we have the money (pandemic loans) and the alternative is worse: permanent pandemic and economic crisis.   

Notes/References:

  1. Phrase “science the shit out of this” is from the movie “The Martian.”   
  2. Bradshaw et al., 2021: https://www.nature.com/articles/s41467-020-20325-7
  3. Kretzschmar et al., 2020: https://www.sciencedirect.com/science/article/pii/S2468266720301572
  4. Aleta et al., 2020: https://www.nature.com/articles/s41562-020-0931-9
  5. Clark et al., 2020: https://academic.oup.com/cid/advance-article/doi/10.1093/cid/ciaa1155/5881818?login=true
  6. Rajan et al., 2020: https://apps.who.int/iris/bitstream/handle/10665/336292/Eurohealth-26-2-34-39-eng.pdf
  7. Cruz, 2020: http://ateneo.edu/sites/default/files/downloadable-files/ADMU%20WP%202020-14.pdf
science the shit out of this - Google Search | Science, Calm, Calm artwork

What 1Sambayan Needs: Broader Representation, Concrete Electoral Agenda (5Ks: Kabuhayan, Karapatan, Kalayaan, Kapayapaan, at Katarungan)

This short note is a reflection on my participation via Zoom in 1Sambayan’s public launch.

1Sambayan’s mention of good governance, human rights, and poverty alleviation as cornerstones of what candidacies should campaign for, is a positive start, but much needs to be done. This short note intends to contribute something towards that goal.

It is suggested that before any talk of choosing candidates or forming a unified/unity slate, 1Sambayan’s broad array of democratic forces should start building consensus on the minimum electoral agenda/platform/program that will be used as a standard in choosing candidates or forming a slate. In other words, platforms BEFORE personalities, and even after that, platforms OVER personalities. We have to accept the fact that personality-based politics is one of the actual hindrances to the implementation of meaningful reforms. We have had centuries of a politics of failed personalities. It’s time to really focus on platforms.

A catchy summation of minimum platforms would be desirable. I propose 5Ks: Kabuhayan, Karapatan, Kalayaan, Kapayapaan, at Katarungan.

KABUHAYAN: immediate economic relief for the poor and the middle class (national minimum wage closely approximating the family living wage – around 1,000 pesos daily; income tax reduction, preferably capping the maximum personal income tax rate at 20% as compared with Singapore’s 22%; abolition of Value-Added Tax/VAT on all medicines, food, basic commodities, electricity, water, internet, house rents etc.; government payment of housing deposit/downpayment for every citizen who wants to purchase his/her first home/house and regulating all housing loan rates offered by commercial banks to ensure that they go as low as or even lower than Pag-ibig Fund rates; reversal of rice tariffication in favor of strengthening local production; genuine universal health care, where all services are 100% free of charge at point of use, with no co-payments whatsoever).

KARAPATAN: ensuring protection for human rights, labor rights, peasant land rights etc. (scrapping of the Terror Law; banning of retired military officials in Cabinet posts, except for the National Defense portfolio; end of oppressive and exploitative labor contractualization schemes; expansion and completion of rural land reform program; implementation of urban land reform)

KALAYAAN: fighting for our national sovereignty and securing our national patrimony

KAPAYAPAAN: resumption of social reform-oriented peace negotiations with the CPP-NPA-NDF (peace talks shall focus on socio-economic reforms that address the root causes of insurgency)

KATARUNGAN: justice, good governance, and accountability (swift prosecution of cases of extrajudicial killings, arbitrary arrests etc.; full recovery of past regimes’ ill-gotten wealth; passage of an enabling law for the Constitution’s anti-dynasty provision to be finally implemented; minimum 6% of the GDP spending for education – as per UNESCO’s standards; scrapping of automatic debt appropriations and a general debt audit towards repudiation of onerous debts; reduction of maximum amount of allowances for all members of the House of Representatives and Senate, the Cabinet etc.; reduction of top-heavy bureaucracies in some government agencies; credentials-based screening for Cabinet nominees).  

Prioritizing agenda-setting and agenda-building is a must, because it is the only effective springboard towards uniting many blocs into one coherent coalition.

Choosing candidates will be easier once the electoral agenda/program has been deliberated upon, approved and accepted by the whole array of democratic forces. This will be our glue, something to bind us into, a new social contract towards a maginhawang buhay for all Filipinos. Furthermore, such program will be our lens, our microscope in scrutinizing whether or not a candidate is desirable or not. They will have to be bound with the people’s electoral agenda. Otherwise, they’ll be no different from the candidates of the other side. If the candidates’ selection process is prematurely jumpstarted without a clear and comprehensive electoral agenda/program, we run the risk of being unable to select the best candidates, and that means losing again in 2022.  

We must remember the lessons of the previous presidential elections. The only exhaustive exit polls in 2016 found out that “The higher the class, the more the appeal of Duterte: His lead over Roxas was 26 points in class ABC, compared to 17 points in class D, and only 7 points in class E.” It means that democratic forces will have to sway the middle classes (class C and D) too, rather than focus only on the poorest (class E).

What would ensure that classes C, D, and E would solidly unite and vote for the democratic forces’ candidates? Our candidates would have to be committed, very committed to URGENT ECONOMIC RELIEF FOR THE POOR AND THE MIDDLE CLASS. Usapang bigas/kanin at pera pa rin naman talaga ang eleksyon. People would always ask, bakit namin kayo dapat iboto? With an unbeatable electoral agenda/platform that takes good care of the Filipino people’s economic needs, our candidates will have bigger changes of winning. Without such an agenda/platform, any “winnable” candidate will in the end lose.

In sum, 1Sambayan is a good start, but it needs to broaden its representation and build the electoral agenda immediately. Broadening representation would necessarily entail activation of grassroots circles, groups, branches etc. But then again, without a clear and comprehensive platform/program, it will be difficult if not impossible. We have to have something that we can all swear to uphold, fight for, assert. An electoral manifesto, a program, whatever the label is.

If needed, I’m volunteering to help craft/write a more detailed document on the KABUHAYAN part of the proposed 5Ks, which, in my opinion, will be the major deciding factor of the 2022 elections.

May our collective efforts further draw their strength from the Filipino people’s dreams and aspirations.

References/Supplementary Materials:

IBON Foundation’s computation of a family living wage: https://www.ibon.org/the-family-living-wage-as-of-february-2020/

Current real minimum wage rates in the Philippines (halos wala nang value ang sahod ngayon): https://nwpc.dole.gov.ph/stats/current-real-minimum-wage-rates/

“ENDO” as word of the year (details on why contractualization is bad and must be abolished): https://www.academia.edu/8510399/ENDO_Mga_Salita_ng_Taon_2014_SAWIKAAN_

Singapore’s personal income tax rate: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/#:~:text=Singapore’s%20personal%20income%20tax%20rates,income%20tax%20rate%20at%2022%25.

A European study that proves “Reducing VAT rates drives down prices and boosts demand”: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/study_reduced_vat.pdf

On home ownership: 35.9% of Filipino families (1 out of 3) don’t own homes: https://psa.gov.ph/content/two-every-three-families-owned-house-and-lot-they-occupied-results-2019-annual-poverty

Number of homeless Filipinos at 4.5 million: https://www.globalsistersreport.org/news/journey-homeless

One peace negotiations, it may not look like it, but’s it’s really true, NDF’s CASER is very much like a finetuned version of our 1987 Constitution: https://ndfp.org/wp-content/uploads/2019/08/FINAL-Jan-17-2018-NDFP-CASER-2017-Web-version-Ver2.0.pdf

UNESCO’s “Education 2030 Framework for Action proposed two benchmarks as ‘crucial reference points’: allocate at least 4% to 6% of GDP to education” (we have never reached that in the previous decades): https://gem-report-2016.unesco.org/en/chapter/target-4-8-finance/#:~:text=The%20Education%202030%20Framework%20for,of%20public%20expenditure%20to%20education.

Makabayan Bloc’s Genuine Agrarian Reform Bill/GARB: https://www.congress.gov.ph/legisdocs/basic_18/HB00239.pdf

Comparison of CARP and GARB: https://www.bulatlat.com/wp-content/uploads/2009/01/8-49-ap-garb-vs-carp-ok.pdf

Proposed Urban Land Reform Act: https://dmmsanjuan.com/2020/07/27/proposed-senate-bill-2020-1-urban-land-reform-act-homes-for-every-filipino-act-batas-sa-pabahay-para-sa-lahat/

Sen. Trillanes’ bill scrapping Marcosian automatic debt appropriations (this is also a left-wing advocacy since then and even now): http://legacy.senate.gov.ph/lisdata/59085266!.pdf

Ed Tadem’s article on debt audit: https://opinion.inquirer.net/101506/historic-audit-illegitimate-debts

Article on what a pro-people charter change could look like: https://dmmsanjuan.com/2021/03/17/pagtupad-sa-pangako-ng-edsa-makabayang-cha-cha-charter-change-makamasang-adyenda/

Mahar Mangahas’ article on 2016 exit polls: https://opinion.inquirer.net/94736/revelations-of-the-tv5-sws-exit-poll

Summary of AmBisyon Natin 2040, a NEDA document which summarizes the Filipino people’s aspirations (from FGDs): http://2040.neda.gov.ph/about-ambisyon-natin-2040/

120,000 pesos as the ideal family monthly income for the Filipino people’s definition of what maginhawang buhay is (as per AmBisyon Natin 2040): https://www.philstar.com/headlines/2016/06/29/1597748/family-4-needs-p120k-monthly

Photo from https://www.facebook.com/1Sambayan-108652564620342

Proposed Senate Bill 2020-1 (Urban Land Reform Act/Homes for Every Filipino Act/Batas sa Pabahay para sa Lahat)

Senate Bill 2020-1 (Urban Land Reform Act/Homes for Every Filipino Act/Batas sa Pabahay para sa Lahat)

AN ACT IMPLEMENTING URBAN LAND REFORM TO PROVIDE HOMES FOR EVERY FILIPINO

Proposed by David Michael M. San Juan

Explanatory Note

Homelessness has always been a problem for the Philippines. It was in this context that ARTICLE XIII (SOCIAL JUSTICE AND HUMAN RIGHTS), Section 9 (URBAN LAND REFORM AND HOUSING) of the 1987 Philippine Constitution was crafted:  “The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas…” (emphasis supplied).

Post-Edsa I, fast forward to 2020, no meaningful and comprehensive urban land reform law has been passed (or filed in Senate, in fact). Existing laws (Urban Development and Housing Act/UDHA of 1992) and filed bills in Congress (e.g. House Bill No. 159 filed during the 1st Regular Session of the 18th Congress in July 1, 2019) are either unable (or not radical enough) to solve the problem. Consequently,  homelessness is still a big problem in the Philippines today, as proven by the oft-quoted statistics on the number of homeless Filipinos which stands at 4.5 million (The Borgen Project, 2020; Chandran, 2018; Jena, 2020; Santos, 2020; Balanza, 2019;  Kadamay/Kalipunan ng Damayang Mahihirap/National Alliance of Filipino Urban Poor, 2017; Lucenio, 2020; Senate of the Philippines, 2019; Elao, 2020). 

According to the Results of the 2015 Census of Population (Philippine Statistics Authority, 2018) – the latest available, as the 2020 census is still on-going – only 55.3% of Philippine households own their house and lot or have an “owner-like possession” of such, while 12.1% of households  rent their house/room including lot. In contrast, 90.4% of Singaporean households own their homes (Singapore Department of Statistics, 2019).

This proposed landmark legislation will thus bring Philippine home ownership closer to desirable Singaporean standards, through a meaningful and comprehensive urban land reform law.

Be it enacted by the Senate and the House of Representatives of the Philippines assembled. 

SECTION 1. Short Title. This act shall be known and cited by its short title “Homes for Every Filipino Act of 2020.”

SECTION 2. Declaration of State Policy. Urban land reform towards home ownership for every Filipino, as a state policy enshrined in ARTICLE XIII (SOCIAL JUSTICE AND HUMAN RIGHTS), Section 9 (URBAN LAND REFORM AND HOUSING) of the 1987 Philippine Constitution is hereby reiterated and implemented:  “The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas…”

SECTION 3. Coverage. This Act shall cover all corporate-owned residential buildings and residential subdivisions and similar estates, all corporate-owned and privately-owned idle lands in urban areas, and public lands suitable for housing development.

SECTION 4. Decorporatization and Decommodification of Housing. This Act hereby de-corporatizes and decommodifies housing in the Philippines by banning big real estate firms from owning residential buildings and residential subdivisions and the like, and automatically transferring the rights and ownership to the said estates to the government, for the purpose of urban land reform directed towards achieving mass home ownership.

SECTION 5. Compensation for Real Estate Firms. The Central Bank is hereby authorized to compensate all affected real estate firms, at a reasonable rate and schedule to be determined, in the implementing rules and regulations of this Act.

SECTION 6. Limitation on Owning Idle Lands. Any corporation or individual is hereby authorized to retain only up to 500 square meters of idle land at any given city. Idle lands beyond such retention limit will automatically revert to public ownership.

SECTION 7. Compensation for Idle Lands Beyond the Retention Limit. The Central Bank is hereby authorized to compensate all affected real estate firms and individuals, at a reasonable rate and schedule to be determined, in the implementing rules and regulations of this Act.

SECTION 8. Interest-Free Loans to Develop Idle Lands Within the Retention Limit for Individuals. The Development Bank of the Philippines is hereby authorized to offer medium-term, interest-free loans to individuals who would like to develop idle lands within the retention limit, for family and/or charitable housing projects, to encourage utilization of idle lands.

SECTION 9.   Selling of Units from Decorporatized and Decommodified Residential Buildings and Subdivisions. Home Development Mutual Fund/HMDF/Pag-ibig Fund is hereby authorized to sell all units from decorporatized and decommodified residential buildings and subdivisions to HMDF members, via its loan facility.

SECTION 10. Full Subsidy for Equity/Downpayment for Decorporatized and Decommodified Residential Buildings and Subdivisions. Subject to the IRR of this law, HMDF is authorized to develop a program to fully subsidize equity/downpayment of HMDF members who would want to avail of such benefit.

SECTION 11. Affordability of Housing Price and Loans. HDMF is hereby ordered to ensure that all residential units to be sold under this Act, are made affordable for the average Filipino family. Furthermore, HDMF is hereby required to always offer a below-the-market interest rate for housing loans under this Act.

SECTION 12. Establishment of the Philippine Home Development Bank. The Central Bank is hereby ordered to help the HDMF is establishing the Philippine Home Development Bank that will specialize in financing small-scale, community-managed housing projects to be led by urban poor organizations, in idle lands beyond the retention limit.

SECTION 13. Universal Membership in HDMF. The HDMF is hereby authorized to craft a feasible plan towards achieving universal membership of working-age Filipino citizens in HDMF, subject to the law’s IRR.

SECTION 14. Implementing Rules and Regulations. The Department of Human Settlements, in coordination with housing rights NGOs and urban poor organizations, HDMF and Central Bank will draft and release the implementing rules and regulations of this Act, not later than 3 months from its effectivity.

SECTION 15. Separability Clause. In case any provision in this Act shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 16. Repealing Clause.  All laws, decrees, executive orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

SECTION 17. Effectivity Clause. This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

APPROVED.

References:

Chandran, Rina. 2018. “Manila’s homeless set to move into more empty homes if official handover delayed.” https://www.reuters.com/article/us-philippines-landrights-lawmaking/manilas-homeless-set-to-move-into-more-empty-homes-if-official-handover-delayed-idUSKBN1H41L7

Ellao, Janess Ann. 2020. “#COVID19Quarantine | Urban poor group reminds gov’t 4.5M Filipinos don’t have a home.” https://www.bulatlat.com/2020/03/17/covid19quarantine-urban-poor-group-reminds-govt-4-5m-filipinos-dont-have-a-home/ 

Jena, Sujata. 2020. “A Journey with the homeless.” https://www.globalsistersreport.org/news/journey-homeless

Senate of the Philippines. 2020. “ANGARA: ACTION MUST BE TAKEN TO AVERT HOUSING CRISIS.” https://www.senate.gov.ph/press_release/2019/0331_angara1.asp

Santos, Ana. 2020. “Poverty punished as Philippines gets tough in virus pandemic.” https://www.aljazeera.com/news/2020/04/poverty-punished-philippines-tough-virus-pandemic-200413063921536.html

The Borgen Project. 2020. “THE STATE OF HOMELESSNESS IN THE PHILIPPINES.” https://borgenproject.org/homelessness-in-the-philippines/

Balanza, Roger. 2019. “Day of the homeless poor.” https://www.pna.gov.ph/opinion/pieces/230-day-of-the-homeless-poor-

KADAMAY. 2017. “Claiming Housing Rights.” https://www.ohchr.org/Documents/Issues/Housing/HousingStrategies/KadamayPhillippines.docx

Philippine Statistics Authority. 2018. “Housing Characteristics in the Philippines (Results of the 2015 Census of Population).” https://psa.gov.ph/population-and-housing/node/129804

Singapore Department of Statistics. 2019. “Households.” https://www.singstat.gov.sg/find-data/search-by-theme/households/households/latest-data

Belmonte, Jose Christopher. 2019. “House Bill 159.” http://www.congress.gov.ph/legisdocs/basic_18/HB00159.pdf

 

Source of featured image: http://www.volunteerkitsap.org/agency/detail/?agency_id=72629

Online Educational Resources

On June 20, 2020, our University made an online “Call for Voluntary Contribution to CHED Online Educational Resources Portal.” In response to that call, I am publishing a page in this academic blog containing links to freely accessible texts, video lectures etc., which I have authored/co-authored or produced/co-produced. Everyone is encouraged to access and share this link: https://dmmsanjuan.wordpress.com/online-educational-resources/

Thank you very much.

Economic Relief in the Time of COVID-19 (LINK TO FULL PAPER)

Economic Relief in the Time of COVID-19: Rationale, Mechanics, Costing, and Prospective Impact of Temporary Value-Added Tax (VAT) Suspension and Income Tax Waiver for the Poor and the Middle Class in the Philippines

David Michael M. San Juan

Professor, De La Salle University-Manila

david.sanjuan@dlsu.edu.ph

Abstract: As a response to the economic crisis brought by COVID-19, the Philippine government has started to implement its Social Amelioration Program (SAP) which aims to provide a monthly cash aid worth 5,000 to 8,000 Philippine pesos (US$ 99.08 to 158.53 at the exchange rate of US$ 1 = 50.46 pesos) to each of the target households pegged at 18 million, for an initial period of two months. Beneficiaries complain that the amount will not be enough for all their needs, while non-beneficiaries and even local government officials clamor for a more broad-based aid scheme. To help provide a feasible solution, this paper will discuss the rationale, mechanics, costing, and prospective impact of temporary Value-Added Tax (VAT) suspension and income tax waiver for the poor and the middle class in the Philippines. The proposed VAT moratorium shall cover food, medicine, basic commodities, & utilities, while the proposed income tax waiver shall cover both public and private workers/employees, except those in the top-income bracket. International benchmarking and funding options for this supplementary economic relief will be also explored.

Keywords: COVID-19, poverty, Philippines, middle class, economic relief

CLICK LINK TO DOWNLOAD FULL PAPER:

Link 1:
https://www.researchgate.net/publication/340510753_Economic_Relief_in_the_Time_of_COVID-19_Rationale_Mechanics_Costing_and_Prospective_Impact_of_Temporary_Value-Added_Tax_VAT_Suspension_and_Income_Tax_Waiver_for_the_Poor_and_the_Middle_Class_in_the_Ph

Link 2:
https://www.academia.edu/42665741/Economic_Relief_in_the_Time_of_COVID-19_Rationale_Mechanics_Costing_and_Prospective_Impact_of_Temporary_Value-Added_Tax_VAT_Suspension_and_Income_Tax_Waiver_for_the_Poor_and_the_Middle_Class_in_the_Philippines

Link 3:
https://dx.doi.org/10.2139/ssrn.3571402

Thank you for your interest.