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DSWD ready to buy commercial rice for Mayon evacuees, other relief operations

THE DEPARTMENT of Social Welfare and Development (DSWD) yesterday gave assurance that it is prepared to procure commercial rice should there be insufficient supply from the National Food Authority (NFA) for disaster relief operations relating to Mayon Volcano and other areas. “So far, the Department has stocks of NFA rice that will last until the first week of March,” DSWD Officer-in-Charge Emmanuel A. Leyco said in a statement. However, he added, “In case there will be a shortage of NFA rice, the Department will explore purchasing commercial rice. As an institution mandated to quickly implement relief operations in times of disaster, our paramount concern is to ensure that ample family food packs are available for distribution to displaced families.” DSWD said under Executive Order 58 series of 1998, the agency can consider other rice supply sources after the NFA issues a certification stating its inability to provide the requirement.

LAVA FLOW
Alert Level 4 remains in place for Mayon Volcano, which continues to exhibit weak lava fountaining, lava flow and degassing from the summit crater, according to the Feb. 12 bulletin of the Philippine Institute of Volcanology and Seismology (Phivolcs). Lava flows from the summit crater have advanced to 3.3 kilometers (kms), 4.5 kms and 900 meters down the Miisi, Bonga and Basud Gullies, respectively. Pyroclastic density currents have deposited to the 4.6-, 4.5-, and 4.2-km reaches of the Miisi, Bonga and Basud Gullies, respectively. Phivolcs also reiterated that the “public is strongly advised to be vigilant and desist from entering the eight kilometer-radius danger zone.”

Turkish Airlines wants slice of Mindanao market

TURKISH AIRLINES is joining this year’s Davao Mega Travel Sale to get a slice of a growing market of international travelers from Mindanao, particularly those going to Europe. “The growth of the traveling population of Davao started like baby steps. Hong Kong, Singapore, Malaysia. Japan was very popular last year, Korea and then surprisingly this year we are expecting a lot of (travelers to) Europe that is why Turkish Airways wants to join the sale,” said Gian Cagiat, a member of the Davao Travel Agencies Association (DTAA), which organizes the event, scheduled this year on Feb. 16-18 at the Abreeza Mall. DTAA President Alex L. Divinagracia said Turkish Airways became excited upon learning the success of last year’s sale, which brought in P50 million gross sales, mostly from ticket sales of long-haul travels. “The outcome of last year was very successful. We were able to hit the target gross sales of P50 million from ticket sales,” Mr. Divinagracia said. — Maya M. Padillo

Nation at a Glance — (02/13/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

TRAIN ride or wreck?

On Dec. 19, 2017, President Duterte signed the Tax Reformation for Acceleration and Inclusion (TRAIN) bill into law, branded as the first tax reform package for a fairer and simpler tax system. It took effect on Jan. 1. It has its good and feared points.

Congress passed two-thirds of the needed revenue for 2018 in TRAIN I. It’s set to pass TRAIN 2 within the month that aims to lower corporate income taxes and modernize fiscal incentives. All told, government wants to raise about P2 trillion — 70% to help fund its P8-trillion Build, Build, Build infrastructure program; 30% to education, social protection, health, and housing among others. That’s a lot of money and a lot of temptations riding on it if you know what I mean.

The good news is that RA 10963 or TRAIN I lowered the personal income tax rate and gave salaried workers extra take-home pay. TRAIN stands for “Tax Reform for Acceleration and Inclusion.” It exempts those earning an annual taxable income of P250,000 and below from paying income taxes. It also raises the tax exemption for 13th month pay and other bonuses to P90,000. Cooperatives, senior citizens, and persons with disabilities retained their tax exemptions.

Surgeries and procedures for correcting birth defects and dysfunctional body areas are tax exempt. VAT exempt are small businesses with total annual sales of P3 million or less; renewable energy, and medicines for diabetes, hypertension, and cholesterol (2019). Monthly rentals up to P15,000 are VAT-exempt. Though tax-exempt workers still have to file their ITRs for the BIR’s record and monitoring purposes. Finally, the current 12-page ITR will be reduced to only four.

However, to compensate for the loss of revenue from income taxes, we will be paying excise taxes on sweetened beverages, and higher excise taxes on petroleum, automobile, tobacco, mining, and coal. The higher monthly household bill will offset the gains from TRAIN I. Payroll managers have started adjusting their systems to reflect the new withholding tax rates. Supermarkets, oil retailers, convenience stores, and even sidewalk vendors have begun updating their price lists.

For example, the retail price of a one-liter bottle of cola could rise to P43 from P31. That’s a 38% price shock! This is due to the P12/liter tax on drinks using high fructose corn syrup, and P6/liter for drinks using sugar and artificial sweeteners. Exempted are milk products; 3-in-1 coffee; 100% natural fruit and vegetable juices; and coffee products. The sugar tax is a protectionist measure masquerading as a health measure.

In other countries, sugared drinks had differing tax rates depending on the sugar content. FNRI research shows that soft drinks account for 1.9% of the Filipino’s daily diet, while carbohydrates (rice and bread) that have a high sugar conversion rate, account for 40%. If they really wanted to raise revenues and protect the Filipino from obesity and diabetes, they should have taxed the real culprits.

domino

Small vendors are now forced to buy less from a fixed revolving fund of, say, P1,000. Sari-sari store and carinderia owners report that soft drinks account for 40% of their daily business. With the price shock from TRAIN, soft drink sales dropped by 50%. It’s a poor family’s staple drink to give “taste” to their meager meals. Furthermore, cigarettes that used to sell at P5 a stick is now priced at P7 a stick.

TRAIN I directly affects power distributors, oil companies, and fuel retailers, but they’ll pass on the cost. Travel and shipping costs will rise. Expect public transport like the airlines, shipping lines, buses, jeepneys, pedicabs, railways, and truckers to raise their fares. TRAIN imposes an P8/liter increase in petroleum products; P2.50-P3/liter for diesel and kerosene; and P1/liter for household gas LPG, this year. Petroleum and gas taxes will gradually escalate until 2020.

Salaried workers are unhappy that government is giving them an income tax break while taking it away with tax hikes elsewhere. While they may have higher take-home pay, the cost of vehicles, electricity, transport fares, wet market and grocery bills will wipe it out and probably exceed the gains.

What else? Estates worth P5 million and below will have zero tax rate but will have a 6% tax rate on any excess over P5 million. The donor’s tax is now at 6% regardless of the relationship between donor and donee. Documentary Stamp Taxes have doubled. Beginning 2018, lotto winnings P10,000 and above will be subjected to 20% tax. Cosmetic procedures for aesthetic purposes will taxed at 5% .

What to expect then? A domino effect is foreseen: a cost-price squeeze will cause the consumer’s purchasing power to shrink. Consumption will drop, affecting the entire supply chain. Manufacturers will produce less. Retrenchments will occur across-the-board. Less sales and profits mean higher unemployment and fewer taxes to pay, fuelling a vicious cycle. That’s a lose-lose situation right there.

Labor unions are sensitive to the impact of TRAIN I on the formal (organized) and informal (underground) sectors of the economy such as vendors, fisherfolk, farmers, public utility vehicle and pedicab drivers. They’re preparing to file wage petitions in all 17 regional wage boards to counter the substantial price hikes in consumer products and services, compounded by inflationary pressures and interest rate hikes.

To cushion the poor from a cost-price squeeze, the DSWD will target cash transfers to the poorest 10-million households for implementation in the 1st quarter of 2018. It will start with a P200/month per family and increased to P300/month in the next 2 years. Looks good on paper. But how will it be distributed and monitored? The previous administration was unable to stop the money from going to dirty hands and pockets.

We need to build our strategic and vital infrastructure to build our economy and the nation. There’s a cost to that. The rich and the upper middle class can surely absorb the hit. It’s those in the peripheries that we need to bring out of poverty, not sink them deeper in it. We need to come together to help each other out.

 

Rafael M. Alunan III served in the Cabinet of President Corazon C. Aquino as Secretary of Tourism, and in the Cabinet of President Fidel V. Ramos as Secretary of Interior and Local Government.

rmalunan@gmail.com

map@map.org.ph

http://map.org.ph

ERC to clear 61 pending rulings during TRO on suspensions

By Victor V. Saulon, Sub-Editor

THE Energy Regulatory Commission (ERC) will be issuing rulings on 61 pending cases within the 60-day period when its four commissioners are back at work in compliance with a Court of Appeals (CA) temporary restraining order (TRO) on their suspensions.

“What we can do right now is the promulgation of the 61 cases,” ERC Chairman Agnes T. Devanadera said during a news conference at the commission’s headquarters on Monday.

The commission has already acted on the 61 applications covering various matters, she said. The pending cases have completed the deliberation process and will be forwarded to the ERC’s technical and legal departments for the writing of their respective decisions.

“There are processes here and we have to make sure that the processes are in place,” she said.

Ms. Devanadera said the Office of the Ombudsman’s suspension jeopardized the ERC and the power industry that it regulates, and the welfare of consumers.

The ERC commissioners were suspended for restating the effective date of a resolution on the competitive selection process (CSP), which requires distribution utilities and power generation companies to subject their power supply agreements (PSAs) to price challenges.

Questions on the legality of the CSP are still pending with the Supreme Court and the ERC commissioners must be accorded substantial due process.

“By substantive due process, it means that the suspension should be based on a just or authorized cause,” Ms. Devanadera said.

The 61 cases for promulgation include applications for capital expenditure, point-to-point transmission facilities, and cases involving interim relief or provisional authority on power contracts.

“With the TRO issued by the Court of Appeals, the ERC can now resume the regular performance of our duties and functions and act on petitions with urgency,” Ms. Devanadera said.

She said she was glad that the court had given weight on the impact of the vacuum of leadership caused by the Ombudsman’s suspension of the ERC commissioners by considering “the welfare of the electric power industry stakeholders, most especially the consuming public who will suffer the consequences of the ERC’s inability to perform its mandate.”

None of the PSAs entered into by distribution utility Manila Electric Co. (Meralco) are among these, Ms. Devanadera said.

Alfredo J. Non, one of the four commissioners whose suspension was put on hold, said there was no timetable for when the Meralco PSAs would be decided.

“It’s not for me for say,” he said.

Asked whether they will be resolved by July before his retirement, he said: “Probably not… because some of the cases also still have to be heard.”

“If it’s completed before my time, fine. If it’s not … the other commissioners, or the new commissioners, continue on,” he said.

“How long does it take for the hearing to be completed? After the hearing, it will have to be discussed by our technical working group. After that, they will have to make recommendations to the commission and then we will deliberate.

“Deliberation doesn’t take only one sitting. Sometimes it takes two or three sittings,” he said.

Japan financing for Metro Manila subway may be ready by March

By Melissa Luz T. Lopez,
Senior Reporter

THE PHILIPPINES hopes to obtain next month an initial financing package from Japan for the construction of the country’s first subway line, following a meeting between the two sides yesterday in Cebu City.

In a statement, the Department of Finance (DoF) said both economies “are looking forward to the signing of the first tranche of the loan for the Metro Manila Subway Project (Phase I) by March 2018.”

Finance Secretary Carlos G. Dominguez III and Socieconomic Planning Secretary Ernesto M. Pernia represented the Philippines during the latest meeting of the Philippines-Japan Joint Committee on Infrastructure Development and Economic Cooperation at Shangri-La Mactan.

Hiroto Izumi, a special advisor to Japanese Prime Minister Shinzo Abe, led the delegation from Tokyo. This is the fourth meeting held by the two parties since March 2017.

The subway plan aims to build a 25-kilometer underground rail system that will connect Mindanao Avenue in Quezon City to the Ninoy Aquino International Airport in Parañaque. Construction is expected to cost P355.6 billion, higher than the previous estimate of P227 billion.

President Rodrigo R. Duterte approved the subway plan in September, with construction expected to start within the first half of 2018. This forms part of the P8.44 trillion “Build, Build, Build” initiative of the administration, which seeks to address connectivity issues and improve the ease of doing business by providing reliable mass transport and road networks nationwide.

Funding for the rail project will be sourced from official development assistance (ODA) from Japan, which will also support two other train lines run by the Philippine National Railways (PNR) which will connect parts of Luzon.

The two countries also committed to fast-track discussions in order to have the subway line to be “partially” operating by 2022, earlier than the original target of mid-2025.

“The Philippine side discussed the progress on the right-of-way acquisition and land resettlement, institutional arrangements on procurement, establishment of Project Monitoring Offices, budget allocation for government counterpart and measures to address cross-sectoral concerns,” the DoF said following the high-level meeting.

For its part, the Japanese delegates outlined steps to “fast-track project/loan processing and implementation” through a shorter review period for procurement, as well as extending grant support for advance works for detailed project designs.

Other agreements signed during Monday’s meeting are a memorandum of cooperation among the Bases Conversion and Development Authority, Japan Overseas Infrastructure Investment Corp. for Transport and Urban Development, and Singapore’s Surbana Jurong for the “New Clark City” project; as well as a partnership between the Department of Information and Communications Technology and Japan Ministry of Internal Affairs and Communications for a technical assistance for a National Broadband Plan.

The two nations expect to sign an exchange of notes for Japan’s financing of a waste-to-energy facility in Davao City in succeeding meetings. Loan packages for the Pasig-Marikina Channel Improvement Project Phase IV and the rehabilitation and improvement of the Metro Rail Transit-3 are also expected “in the coming months.”

Consultations for the PNR North-South commuter lines are likewise ongoing, with financing to be shared by the Philippine government, the Japan International Cooperation Agency and the Asian Development Bank, the DoF said.

Japan’s Mr. Abe pledged to contribute a total of 1 trillion yen ($9 billion) as ODA and investments in the Philippines over the next five years. The two nations agreed to collaborate on projects and issues on regional development, information and communications technology, energy, agriculture, environment, public safety, and disaster prevention.

Tokyo also pledged to deliver heavy machinery to help rebuild Marawi before March, alongside a new commitment to build shelters and community facilities for the city.

Why should we care about ‘midterm’ elections?

In most democracies these days, discussions on electoral politics are surprisingly limited to general elections. Most media analysts and election “experts” really find happiness and satisfaction in describing the fanfare and spectacle of electing presidents and creation of a powerful Cabinet in modern-day parliaments. They are usually silent about midterm elections that are also taking place and how they help define the future of governments and societies across the world.

At present, the attention and interest toward midterm elections have always been negligible, if not nonexistent. The interest toward midterm elections regularly appears months and even weeks before election day. This interest usually culminates on election day, where people are forced to monitor and make sense of the outcome of the election.

Why should we be concerned about midterm election? What is its real function?

Midterm election is commonly understood as an election cycle where people elect members of the government exactly halfway of the term of the other set of elected officials. It is an election that punctuates the term of the sitting head of government. In other societies (such as in parliamentary democracies like UK, Canada, India, etc.), it is an election usually held ahead of a scheduled election. In this regard, it is used as a way to constitute a parliament following its dissolution.

These days, commentators and pundits tend to frame midterm election as a mere extension of the political space of the sitting government — essentially sutured or perhaps even subsumed to those issues and controversies that define an existing political regime. This can be explained by the nature of the election itself which can be conceptually expressed into two elements: 1.) particular — a part of the government is elected; 2.) intermediate — election held in-between general elections.

Another way of explaining this problem is the fact that many of these commentators and pundits are not really familiar of what it really means, especially for contemporary democracies. I think, this is where the blame should be given to our contemporary scholars and academics in the field of political science for keeping silent about the real purpose of midterm elections in democratic societies.

Midterm elections are known to have the following functions to contemporary societies. One, they shape the political contours and climate leading to the next general election. The winning coalition or party in a midterm election usually gets the momentum by holding enough key positions in the government needed to mobilize votes especially on election day. Also, they act as referendum for the sitting government. Winning or losing the midterm elections is reflection of how well or bad the administration is performing. Lastly, they are also seen as an opportunity for emerging political actors to change the political narrative by advancing his/her political issue and redirecting the attention of the general public away from a future lame-duck president (or his/her party in a parliamentary government). Contrary to the analyses of those “political analysts” and “election experts,” these points are fully supported by extant studies on midterm elections (See the works of Prof. James Campbell, Prof. Robert Erikson, Prof. Alan Abramowitz, among others.)

This year, the US will elect all members of the House of Representatives (435 representatives), one-third of the members of the Senate (33 senators) and majority of the Governors (36 states and 3 territories) in the 50 states and 5 territories that comprise the United States of America. The three functions of midterm elections will be useful in understanding the November 2018 elections. President Donald Trump and his Republican Party will certainly try to bounce back to its losses (e.g. Obamacare, Tax cuts, among others) and will fight head-on in securing more seats in the Senate (where 24 Republicans have already announced their retirement from politics), House, and State governorships. But it is going to be an uphill battle, given that the Democratic party is also expected to deliver votes on election day.

In 2019, the Philippines will elect all members of the House of Representatives, one-half of all members of the Senate (12 senators) and all local government officials (except those at the Barangay level).

However, compared to US, the Philippine case is certainly different. President Rodrigo Duterte’s coalition led by his political party, Partido Demokratiko ng Pilipinas (PDP), enjoys high popularity among the voters. The “Duterte bloc” controls all political spaces as well as governmental institutions in the Philippines today. Opposing groups and personalities, unfortunately, are incapable of mounting an alternative to the Duterte rule.

Given this situation, there is this fourth purpose of midterm elections, exclusively applicable to flawed democratic societies like the Philippines — a way to contest a highly powerful bloc. Democratic forces should explore using midterm elections as a way to engage and challenge the monolithic rule of the sitting government by participating in all aspects of an electoral cycle (pre-election, election, and post-election). By this sanctioned political opening, political institutions will be forced to allow fragmented groups to converge and coalesce on their common issues.

Political strategists, campaign handlers, and most importantly, social movement activists should be aware of this potential of midterm elections to change the status quo (remember 2007 midterm elections under Arroyo’s regime?). They should think of ways to be inclusive of other political groups and be clear in contrasting themselves with the sitting government. Most importantly, they should make sure that they are the better choice than the “fence-sitters” (or those who refused to make a clear stand on issues) and be a complete counterforce to the ruling coalition.

 

Arjan P. Aguirre is an Instructor at the Department of Political Science, School of Social Sciences of the Ateneo de Manila University. He handles courses on Politics and Governance, History of Political Theory, Contemporary Political Theories, and Electoral Reforms in the Philippines.

China, other Middle East destinations considered for overseas workers displaced from Kuwait

THE Department of Labor and Employment (DoLE) is considering the deployment to China of Overseas Filipino Workers (OFWs) repatriated from Kuwait, Presidential Spokesperson Herminio L. Roque, Jr . said.

“The Labor secretary is finalizing the mechanism by which we can deploy workers to China as an alternative destination. So, that’s being worked out. Hopefully, there will be bilateral agreements soon,” Mr. Roque told reporters at a briefing Monday.

Also on Monday, Department of Foreign Affairs (DFA) Undersecretary for Migrant Workers Sarah Lou Y. Arriola received the first batch of 377 workers who were repatriated on three commercial flights that left Kuwait on Sunday afternoon.

According to Ms. Arriola, “the Philippine Embassy and Philippine Overseas Labor Office (POLO) in Kuwait expect that more than 10,000 Filipinos who have overstayed their visas will avail themselves of an amnesty program” that they arranged with the Kuwaiti government.

DoLE Secretary Silvestre H. Bello III said that “both the DFA and the DoLE have made arrangements with Philippine Airlines and Cebu Pacific for the repatriation of those who already have travel documents and all those who want to return to the country.”

President Rodrigo R. Duterte on Friday ordered Filipinos working in Kuwait to leave the country “within 72 hours” after receiving a report about the body of a missing Filipina domestic helper believed to have been frozen for more than a year.

Both the DFA and the DoLE, for their part, said they will “strictly carry out the President’s directive to prevent more workers from reaching the Gulf state.”

Mr. Roque has also announced that “those who opted for repatriation from Kuwait will be given financial assistance, including capital for livelihood ventures.”

“The missions all over the Middle East in particular have been instructed to find alternative employment for our kababayans who have opted for voluntary repatriation from Kuwait. We are particularly keen on finding alternative employment in countries such Oman and Bahrain, both of which are signatories to the relevant ILO Convention that protects migrant workers,” the spokesman added.

As to the need for justice, Mr. Roque said that the Philippine government “will hold Kuwait responsible under the concept of state responsibility.”

“Kuwait, under international law, has a legal obligation to provide legal redress for the victims, Filipino victims of these horrendous crimes in Kuwait. And of course, if Kuwait fails in this regard, then it will incur international responsibility for an internationally wrongful act.” — Arjay L. Balinbin

ERC caps system loss pass-on costs at 5% for private distributors

THE electricity systems loss that distribution utilities can pass on to consumers has been capped by the Energy Regulatory Commission (ERC) to as low as 5.5% for private distribution utilities, the commissioners said on Monday.

“[The] range is 8.25 to 12% [for] ECs (electric cooperatives),” said ERC Commissioner Josefina Patricia A. Magpale-Asirit told reporters on Monday on the sidelines of a press conference at the commission’s head office.

“[For] private [distribution utilities, the] range is 5.5 to 6.5[%],” she added.

The lower figure is the resulting cap after the gradual decrease of the systems loss cap within a four-year period, she said.

Systems loss is the difference between the electric energy delivered to the distribution system and the energy delivered to the end-users and other entities connected to the system.

The Senate has separately approved on third and final reading a bill that seeks to reduce the cap to 5% from 8.5% of systems loss for private distribution utilities. The cap for electric cooperatives will be lowered to 10% from 13%.

Sen. Sherwin T. Gatchalian, who chairs the Senate energy committee, said that with the proposed rates, the bill would contribute to immediate consumer savings. He noted that a systems loss rate of 10% for an electric cooperative in Mindanao would translate to a rate reduction of P0.1636 per kilowatt-hour. The annual savings at P196.32 is equivalent to seven kilos of rice, he added.

ERC Chairman Agnes T. Devanadera said the commission will review its system loss cap should the Senate bill on system loss become law. — Victor V. Saulon

A meal for any occasion

It seems that in our culture, no commemoration is complete without a meal. It’s not just for happy moments. We also eat when we lose a contest (accompanied by hard drinks), attend a wake, say goodbye to a retiree not yet in his 50s, open a new store, welcome a new partner, or any other milestone event we can think of.

Our predilection to eat for any occasion is not related to hormonal imbalance. It is a cultural bias. An unwritten rule on Filipino hospitality states that food must be served at all times. We follow a simple social rule — where two or more are gathered together for any reason, food has to be provided. The only exception seems to be when lining up for a ride. In this instance, the queue consists of strangers who are absorbed in their gadgets, and don’t feel obliged to chat — is this bus going to Katipunan?

The social convention of serving food at any gathering, whether social or corporate, attracts participants whose destination is the buffet table, or maybe unguarded handbags and cell phones.

Free meals, sometimes with promotional giveaways, attract mothers with toddlers along with an assortment of gawkers to such corporate events as the annual stockholders meetings of publicly listed companies. These are scheduled events in posh hotel settings that ever-alert gate-crashers look out for. Such corporate lurkers dressed in “drab casual” wander into the ballroom… right after the reception desk has disbanded.

Meals are served (or open for serving) after the president’s report and just before the final item on “other matters.” (Are there any other questions? There being none, let’s enjoy our carbo-loaded offerings at the buffet table.) Freeloaders don’t ask questions about EBITDA or the declining market share of the company. They head straight for a table with the flatware setting still undisturbed. And why do they always come with big back packs?

The phenomenon of uninvited guests popping up at invitation-only events like book launches misleads authors in concluding that their tome on the rise of the work ethic among indigenous people in Southern Mindanao is bound to sell out its print run of 250, judging from the crowd at the pica-pica table. (Sir, the siomai tray has run out.) That the line consists of a bedraggled lot whose attire suggests not literary hunger but enforced fasting does not dampen the optimism of the self-published author. These may be starving artists, after all, or bloggers who can give fulsome reviews of the new book. (Sir, I need a complimentary copy.)

The feeding frenzy of our culture also has supply-side aspects.

Hosts of events that involve food and catering arrangements are frustrated in their inability to nail down the exact number of guests to expect with the determined refusal of invitees to follow RSVP protocol. (I’m still shaking off this persistent ennui.) Still, who can anticipate the number of uninvited tag-along’s even with assigned tables? (Let’s add two extra chairs here with paper plates.)

An official visit to the regional office of a multinational company can lead to culture shock. A meeting is defined as a discussion without any meal. Food is considered merely a nutritional necessity. If it is served at all, it is during a working lunch where health and a low sugar and cholesterol count seem to be the only consideration — want a Cobb salad or just carrot sticks with alfalfa sprouts? The message is clear: if you need to be stuffed, do it in your own time.

Why is food such an obligatory part of office meetings lasting more than 30 minutes? Cost-cutters should view the suspension of meals at meetings as an opportunity not just for improving the bottom line but contributing to a healthier work force.

But if food is removed from meetings, it is not the attendees that will raise a howl. One only has to observe what happens to untouched leftovers to see where the pain will be felt. It is no mystery why there is so much food at meetings even if there are only a few attendees. The meal service is likely of interest to those with grocery bags on their desk drawers.

Virtual meetings, chats, and e-mail exchanges with numerous addressees have made some actual meetings unnecessary. Still, when the digital discussion stalls, and the teleconference equipment or line hits a snag, the parting salutation of the presiding officer is only too predictable — why don’t we break for lunch in the next room?

 

A. R. Samson is chair and CEO of Touch DDB.

ar.samson@yahoo.com

Restoration of the Notice of Informal Conference

The start of the year has been good for taxpayers who are under investigation, as new tax rules introduced some changes that will benefit them. Changes such as the lowering of the deficiency interest rate, the no simultaneous imposition of deficiency and delinquency interest, and allowing the deduction of an expense for which necessary withholding tax was belatedly paid are sure to be of great help. As they say, good things come in threes, and I believe the third important change in the tax rules which affects tax investigations is the reinstatement of the Informal Conference stage in the assessment process.

In 2013, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 18-2013, which removes the Notice of Informal Conference (NIC) stage in the assessment process. The intention is to expedite the proceedings and avoid corruption through reduced coordination between taxpayers and revenue officers. While the intention was noble, the removal of the NIC stage did not actually resolve the issues it sought to address and, in fact, has just made the assessment more burdensome for taxpayers.

Thus, the issuance of RR No. 07-2018 reinstating the NIC stage is one of the welcome changes in the tax rules for the following reasons:

First, the due process requirement is reinforced. As established under our laws and various jurisprudence, the truest meaning of giving due process under the law is being given the right to be heard before one is deprived of life, liberty, or property. In view of the restoration of the NIC stage, taxpayers are given ample time to explain and present supporting documents on the initial findings of the revenue officer. Only after the NIC stage and when the taxpayer is still found to be liable for deficiency tax shall the case be endorsed for the issuance of the Preliminary Assessment Notice (PAN).

Prior to the issuance of RR No. 07-2018, after the taxpayer submitted the requested documents during the tax investigation, the examiner was to prepare a report and issue a PAN. The revenue officer was not required to discuss the findings with taxpayers. The issuance of the PAN will more likely than not result in the issuance of a Final Assessment Notice (FAN) with the same findings, despite the submission of a Reply to PAN. The 15-day period to issue the FAN set forth under RR No. 18-2013 clearly undermined the taxpayer’s right to due process during the tax investigation. The period provided under the rules to issue the FAN is unrealistic for a revenue officer to evaluate the explanation and supporting documents, taking into account the case load of each examiner. Under previous regulations, the taxpayer was, in effect, limited to presenting an explanation and discussing this with the examiners after the FAN was issued and a protest was filed. Clearly, the right to be heard is curtailed under the previous rules.

Second, bloated assessment is avoided. Revenue officers were previously not required to discuss with taxpayers their findings before issuing the PAN and then the FAN. This practice has resulted in exorbitant deficiency tax assessments, since all discrepancies noted by the BIR are included, even those which can easily be explained, e.g., findings for improperly accumulated earnings tax for a Philippine Economic Zone Authority, final withholding tax for payment to a non-resident foreign corporation for services rendered abroad, timing differences in the recognition of sales/purchases, etc. With the restoration of the NIC stage, discrepancies noted by the BIR may be reduced before the FAN is issued.

Considering that taxpayers and revenue officers are given time to discuss the findings during the NIC stage, simple issues and discrepancies noted can be threshed out immediately. Thus, only the contested findings will be the subject of the PAN and FAN. The issue of the drastic lowering of the tax deficiency paid by the taxpayer, implying a resort to extra-legal means in closing the tax investigation, will be avoided.

Last, the assessment procedure will be expedited. Since the issues will be reduced during the NIC stage, closing the tax investigation within a short period may happen. Under RR No. 07-2018, the NIC stage shall not extend beyond 30 days from the receipt of the notice. If, after the NIC stage, the examiner and the taxpayer have agreed to the remaining findings for tax deficiency, the assessment is likely to be closed at the administrative level, i.e., at the PAN or FAN stage. The fear of a prolonged tax assessment due to the lengthy NIC stage is addressed by the 30-day limit set by the regulation. The extended period of assessment reaching the request for reconsideration stage and the filing of a case in court may be reduced since taxpayers are given more chances to explain their position at the BIR level before the PAN is issued.

With the new tax rules in place, it appears that the government is keen on making compliance easier for taxpayers. The changes we are seeing show that the grievances of taxpayers did not fall on deaf ears. There is more room for improvement in our tax rules, and I believe we can expect more changes to come. For now, however, let us be grateful for this simple victory for taxpayers.

Jennylyn V. Reyes is a manager of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.

Stocks end lower on inflation, rate hike concerns

SHARES continued to drop on Monday as investors stayed cautious amid fears of rate hikes and inflationary pressures that continue to affect Western markets.

The 30-company Philippine Stock Exchange index (PSEi) gave up 0.18% or 15.78 points yesterday to close at 8,487.91, marking the third day of losses for the bellwether.

The broader all-shares index also lost 0.04% or 2.48 points to finish at 5,025.90.

“Our index fell below 8,500 on the lack of fresh leads and the correction last week is still making investors stay in a cautious mood towards emerging markets like the Philippines,” Timson Securities, Inc. equity trader Jervin S. de Celis said in a mobile phone message.

Mr. De Celis noted that investors were also veering away from index stocks, as they “are the most affected when the Western markets dip due to inflation and rate hike fears.”

“Negative market sentiment continues from uncertainty amid wide swings in the US markets… We attribute this to lingering inflationary concerns as the BSP (Bangko Sentral ng Pilipinas) has revised its inflation target to 4.3% from 3.4% previously,” Papa Securities, Corp. Research Head Ramon Vicente T. Kabigting said in an e-mail.

The financial sector was the sole sub-index that managed to post gains, rising 0.65% or 14.35 points to 2,198.89.

On the other hand, the mining and oil counter was down 1.22% or 139.76 points to 11,284.45, followed by industrials, which dropped 0.82% or 95.53 points to 11,470.62. Property ended 0.29% or 11.26 points lower at 3,812.85; services slipped 0.24% or 4.18 points to 1,692.21; while holding firms shed 0.08% or 7.67 points to 8,607.61.

The market saw thinner trading on Monday, with a value turnover of P5.86 billion after some 2.39 million issues switched hands, down from the P8.62-billion turnover recorded last Friday.

Decliners trumped advancers, 118 to 94, while 36 issues were flat.

Net foreign selling, meanwhile, swelled to P1.27 billion today, significantly higher than the net outflow of P136.80 million recorded last Friday.

Papa Securities’ Mr. Kabigting attributed the increase on outbound funds to continued volatility in the market.

Meanwhile, Timson Securities’ Mr. De Celis said investors are looking forward to the corporate earnings season as well as the MSCI index rebalancing announcement on Tuesday, which will be effective on Mar. 1.

“I guess this will also urge investors to keep cash for more buying power to spend on the new stocks that will be included  in the index.”

Meanwhile, most Southeast Asian stocks rose on Monday as Wall Street’s recovery in the last session instilled some confidence into Asian markets.

Wall Street’s main stock indexes climbed more than 1% on Friday, giving investors some solace after a week of major swings that shook the market out of months of calm. — Arra B. Francia with Reuters

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