Locked up during COVID-19: Costly phone calls strain families

September 24, 2020 | 2:58 pm

With COVID-19 curtailing visits in many prisons and jails, families rely on phone calls, video chats, and other forms of messaging, but advocates say the high costs of those services take a heavy financial toll on the people who can least afford them.

NEW YORK — Like many Americans with aging parents, Dominque Jones-Johnson started checking in more regularly with her father when the coronavirus pandemic broke out—but unlike most families, the cost of the calls strained her budget to the breaking point.

Her father, Charles Brown Jr., is incarcerated for aggravated rape, burglary, and “crimes against nature”—she said he was falsely accused of all charges—in the Louisiana State Penitentiary, where a 15-minute phone call costs $3.15.

By May, these local calls—which would have been free for most people living in the state—had cost the family nearly $400.

“They’re making me pay to incarcerate myself,” Charles Brown Jr. told the Thomson Reuters Foundation earlier this month. A week later, he contracted COVID-19 and was put in isolation, no longer able to speak with his daughter.

Ms. Jones-Johnson, who founded the charity Daughters Beyond Incarceration, said in a phone interview that “the money stressed me out, but not talking to him stresses me out more”.

With COVID-19 curtailing visits in many prisons and jails, families rely on phone calls, video chats, and other forms of messaging, but advocates say the high costs of those services take a heavy financial toll on the people who can least afford them.

Even before the pandemic, a third of families went into debt to finance visits to incarcerated relatives and use telephone and messaging systems, said Bianca Tylek, executive director of advocacy group Worth Rises.

Now, those communications services are essential to the roughly 2.3 million people behind bars in the United States.

“People need to be in touch more than ever,” said Ms. Tylek. “And they have less money than ever to pay for it.”

A spokesman for the Louisiana Department of Corrections said it offers 30 minutes of free calls a week during the pandemic and that it “understands the importance of inmates maintaining contact with loved ones.”

INFRASTRUCTURE
In US prisons and jails, private firms build out the communications infrastructure in exchange for the opportunity to charge for their services, often splitting revenue from the calls, video chats, and messaging services with the facility.

Critics of the practice refer to it as a form of kickback, paid by the industry to win access to captive customers.

A report published last year by the nonprofit Prison Policy Initiative (PPI) found that the average cost of a 15-minute call from local jails is $5.74.

Rates in state-run prisons are significantly lower, and calls across state lines from jails and prisons have been capped at 21 cents per minute by the Federal Communications Commission (FCC), which currently only regulates interstate calling.

While phone calls make up the bulk of communications between prisoners and their families, video calling and e-mail services, offered via kiosks and tablets, are often set up under similar agreements.

A 2017 case-study by the Vera Institute of Justice found the video calls in Washington State—which at the time cost $12.95—proved too expensive for many inmates and nearly 90% never even tried to use the service.

Ms. Jones-Johnson must pay $7.50 for a 30-minute video call with her father.

For local and state governments, those costs can be a significant source of revenue, explained Democratic Representative Josh Elliott, who is sponsoring legislation that would make phone calls from Connecticut’s state prisons free.

In 2019, Securus Technologies, a private firm that operates the phone network, spent $40,000 to hire lobbyists to oppose Mr. Elliott’s legislation, according to government documents.

After the lobbying became public Securus, which is owned by LA-based private equity firm Platinum Equity, promised it would no longer oppose the bill, Mr. Elliott said.

“This is the most straightforward thing,” he said in a phone interview. “Make calls free so people can be in touch with their families.”

HEAVY COSTS
The pandemic has made a tough situation even tougher, said Mashonda Jones, whose son has been incarcerated for three years at the Virginia Beach Correctional Center following a conviction for breaking and entering, according to local media.

Ms. Jones runs a soul food restaurant that was forced to shut down in March because of coronavirus restrictions—her son’s facility is not allowing visitors.

With money tight, she now spends $100 a week on calls and video conferencing so that her grandchildren can stay connected with their father.

“Even though their dad is incarcerated I want them to know they still have a dad,” she said.

Global Tel Link (GTL), the company that operates the phones at the jail, offers two free five-minute calls a week, Ms. Jones said. Video conferencing at the facility costs $7.50 for 30 minutes.

“It wasn’t enough,” Ms. Jones said. “It’s just hello, how you doing, here are the kids and then he’s gone.”

A spokesman for GTL said it was “evaluating ways we may be able to improve our permanent free weekly communications program in the future.”

Kathy Hieatt, spokeswoman for the Virginia Beach Sheriff’s Office said in e-mailed comments that inmates pay 11 cents per minute for both local and long-distance calls, down from 15 cents per minute in 2018.

A spokeswoman for Securus said it had lowered the average cost of calls by more than 30% per minute over the last three years. The company said this month it had offered “191 million free minutes of phone connections” since the start of the pandemic.

Ms. Tylek, with Worth Rises, pointed out that adds up to less than 10 minutes of free calling a week for the more than 1.2 million in facilities with Securus phones.

EMERGING SOLUTIONS
In recent years, lawmakers and regulators have taken steps to rein in the price of connection for incarcerated families.

The Democrat-controlled US Congress passed a law in May that would empower the FCC to limit the cost of calls within states as well as between states, and would bar local and state governments from taking a cut of the revenue.

The law has not yet passed the Republican-controlled Senate.

Brian Hill, the CEO of Edovo, a start-up that builds cheaper connectivity tools for incarcerated people—including tablets and free education software—said the root problem is the profit-sharing model.

“The system taxes the families of those who are incarcerated,” he said. “Ideally, you’d get rid of revenue sharing across the board.”

Ms. Tylek, who tries to convince investors to boycott companies that profit off incarceration, said the only solution is to put the firms out of business, and have the government pick up the bill for all essential services, like phone calls.

Meanwhile, Ms. Jones-Johnson is so worried that her father won’t receive adequate treatment for COVID-19 that she’s willing to pay what it takes to check in on him.

“It’s a constant struggle,” said Ms. Jones-Johnson. “But what else can I do?” — Avi Asher-Schapiro/Thomson Reuters Foundation

‘Lockdown Lite’ is the new strategy for fighting COVID-19

September 24, 2020 | 1:52 pm

Fresh off a summer of relative freedom after harsh lockdowns at the beginning of the pandemic, Europe is trying a new strategy to halt the coronavirus’s next surge: Lockdown Lite.

Unlike the blanket stay-at-home orders that characterized responses to COVID-19’s first wave, a partial lockdown isn’t designed to stop transmission completely. Instead, the idea is to home in on hot spots—certain neighborhoods, nightclubs, or private parties, for example—while leaving large parts of the economy open for business.

With death rates running at only a small fraction of the levels last spring despite surging infections in France, Spain, the UK, and other countries, governments want to avoid draconian measures that caused their worst recessions in memory. Partial and shifting lockdowns are likely to become the norm into next year at least, as countries wait for an immunization that’s effective and broadly accessible.

“We have a lot left to go,” said Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota. “I don’t think people really fully understand that. We’re still in the middle innings of a baseball game at the best.”

One lesson from the Asia-Pacific region, further along in the pandemic timeline, is that Lockdown Lite works only when paired with a broader strategy of testing and tracing. Europe’s inability to meet surging demand for testing and some countries’ lack of tracing capacity suggests the region could struggle with the new approach.

NEW MEASURES
That hasn’t stopped governments from trying. Across western Europe this week, authorities have cracked down on nightlife, restricted gatherings, and tightened rules on mask-wearing in public spaces.

In the UK, Prime Minister Boris Johnson asked residents to work from home for six months if they can and ordered pubs and restaurants to close at 10 p.m.

In France, bars in the Paris region and other cities will be forced to close at 10 p.m. at the latest, starting Monday, while in the Marseille area, currently one of the most affected, all restaurants and bars will be shuttered, Health Minister Olivier Veran said Wednesday evening.

While the government isn’t currently considering lockdowns, even local ones, Mr. Veran said, it will reduce crowd-size limits for public events and has added new restrictions on private gatherings beginning Saturday.

In Spain, Health Minister Salvador Illa urged Madrid residents not to leave home unless they must, even as restaurants outside the worst-affected areas are allowed to stay open until 1:30 a.m.

The goal should be to create a sustainable situation where schools and economies aren’t hobbled by the virus, rather than simply hoping that a vaccine will soon solve the problem, said Robert Schooley, infectious disease specialist at the University of California San Diego.

“We really have to get on with it, about how to operate in the COVID era where the virus is kind of going to be looking over our shoulder for a while to come,” Mr. Schooley said.

TESTING, TRACING
If the progression of the pandemic in the Asia-Pacific region is any precedent, targeted measures can work if they’re combined with rigorous testing and tracing, and if local populations follow them. Facing flare-ups from late June through August that were sometimes higher than the initial spread of contagion, countries initially refrained from blanket orders.

After an outbreak in Beijing in June, China abandoned its previous strategy of confining millions of people to their homes. Instead, the government shut schools, ordered more than 11 million tests, and told residents in high-risk housing compounds to stay home, while leaving a majority of the city’s more than 20 million people free to move around.

The targeted approach reaches its limits in places where infections of unknown origins grow to account for a high percentage of new cases. That’s when contact-tracing breaks down, leaving officials unsure where asymptomatic virus cases could be lurking. In Australia and Hong Kong, that led authorities to turn again to across-the-board lockdowns to slow the virus’s advance.

Australia’s second-largest city, Melbourne, first tried to lock down only the public housing blocks that were hot spots of infection. But as unlinked cases kept emerging, the government closed down the city of 5 million people from July until September.

Hong Kong, which saw its worst outbreak erupt in July, couldn’t fully lock down because tiny apartments leave some families without their own kitchens or bathrooms. Instead, the Asian financial hub limited restaurant dining hours, banned public gatherings of more than two people, and mandated masks even when exercising outdoors. It adapted measures every seven days to calibrate the blow to the wounded economy.

ALTERNATING WEEKS
European authorities could try something similar, alternating two weeks of strict lockdown with four weeks of “less rigid” steps, according to David Salisbury, an associate fellow at the global health program at Chatham House, the London-based think tank.

“It’s a possible interim approach that never lets transmission really take off,” Mr. Salisbury said. “You don’t have to have a total shutdown.”

In its patchwork response to the new flare-up, Europe now looks more like the US, where targeted lockdowns have been imposed on college campuses and other infection clusters even as reopening proceeds elsewhere.

Lockdown Lite has shown some success in Europe. In Italy, authorities closed nightclubs at the first signs of another wave of infections in August—and have managed to avoid the same degree of resurgence as in France or Spain.

Yet the new measures have also created confusion over government flip-flops—such as the UK’s abandonment of a drive to get workers to return to offices—as well as some grumbling about mixed messages.

In Munich on Wednesday, with Oktoberfest canceled and a five-person limit on gatherings set to go into place the following day, a trio of tour guides in front of the neo-Gothic city hall wondered how long they’d be able to scrape together even a handful of sightseers. “The rules are really inconsistent,” said Brett Gooden, one of the guides. “It’s hard for the public to adjust.” — Bloomberg

Philippines’ army of migrant workers retrains for life back home

September 24, 2020 | 1:22 pm

The Philippine government is trying to retrain hundreds of thousands of Filipino workers who are returning jobless from overseas as the pandemic batters economies around the globe.

Already struggling with unemployment that spiked to record levels when the pandemic hit, the Southeast Asian nation is bracing for nearly 300,000 overseas Filipino workers—like caretakers, maids and seamen—to return home this year. The government is offering free programs to reskill these workers for jobs such as call-center agents, teachers, and contact tracers.

More than 5,000 returnees have already applied for the training, with health care, technology and, tourism courses the top choices.

Among the returning workers is Marlon Gabitano, 51, a history teacher who was placed on unpaid leave from a school in Qatar. Back in the Philippines, where he has a wife and three sons to support in Pampanga province north of Manila, Mr. Gabitano has been attending government-backed online seminars to look for a temporary job or the means to set up a business.

“I’m looking for anything that can help tide us over, because life here in the Philippines is hard,” he said.

TEACHERS, TRACERS

For decades, waves of college-educated Filipinos have left the country in search of better-paying work abroad. The money sent home by this diaspora of about 10 million people has helped fuel what until this year was one of the world’s fastest-growing economies—headed this year for a sharp contraction.

“Returning workers will have to compete with local job seekers, but many sectors want to prioritize them,” Labor Assistant Secretary Dominique R. Tutay said in an interview. “It’s perhaps because of the difficult experience of leaving the country, then having to return after losing their jobs.”

Retraining these workers will likely be a “bumpy process,” said Jessie Lu, an economist at Continuum Economics in Singapore. So far, government support for displaced workers is “insufficient to offset the loss of income,” she said.

Some of them can be tapped as teachers, while seafarers can be hired for construction work, Tutay said. Returning migrants will be prioritized in hiring 50,000 contract tracers to help control COVID-19 infections, Interior Secretary Eduardo M. Año said at a briefing last week.

Business-process outsourcing, one of the few parts of the Philippine economy to escape the downturn, could be promising as a landing pad, with call centers willing to absorb returning workers with no background in the field, the Labor Department’s Ms. Tutay said. Jobs in telehealth—where agents answer customers’ health-related queries—are particularly in demand, she said.

SHORT-TERM FIX

Still, the reskilling effort may be only a short-term fix.

“At least it’s helping them stay productive,” said Nicholas T. Mapa, senior economist at ING Groep NV in Manila. But many are likely to head back overseas when better-paying work becomes available again.

While helping repatriated workers find jobs at home, officials aren’t abandoning the decades-long labor export policy. The government is seeking alternative labor markets for Filipino workers, including China and eastern Europe, Labor Secretary Silvestre H. Bello III said in a recent online forum.

Mr. Gabitano, for his part, hopes to be part of that exodus again—despite the hardship of being separated from his loved ones.

“I will leave the Philippines again the first chance I have,” he said. “It’s hard to see my family suffering here every day.” — Bloomberg

IMF official warns coronavirus will weigh on some economies for years

September 24, 2020 | 12:14 pm

WASHINGTON — The coronavirus crisis is lasting longer than expected and it will take some countries years to return to growth, the No. 2 official at the International Monetary Fund (IMF) said on Wednesday.

The Fund has provided some $90 billion in total financing to 79 countries, including 20 in Latin America, since the start of the health crisis, an IMF spokeswoman said.

It is continuing to work with member countries on how to contain the pandemic and mitigate its economic impact, First Deputy Managing Director Geoffrey Okamoto told an online event hosted by the Center for Strategic and International Studies.

“We’re trying to preserve our financial firepower,” Mr. Okamoto said. “We’re talking about a … return to growth that’s going to take a few years, and many countries along the way that are probably going to need assistance.”

Latin American and Caribbean economies are the hardest hit in the world by the pandemic, reporting around 8.4 million coronavirus cases, and more than 314,000 deaths, both figures being the highest of any region.

Mr. Okamoto told the event that Fund officials were in talks with the Group of 20 major economies about extending a temporary halt in official bilateral debt service payments by low-income countries under the Debt Service Suspension Initiative (DSSI), and how to kickstart private sector participation.

The G20 initiative approved in April expires at the end of the year, but experts and government officials in many countries have backed extending it into 2021, with a decision expected in coming weeks and months.

The issue could come up when finance ministers from the Group of Seven advanced economies meet online on Friday. In August, the ministers agreed to consider extending the DSSI.

United Nations officials and others have urged the G20 to expand their efforts to include middle-income countries and island nations hit by the collapse of tourism.

The issue of debt sustainability was “top of mind” for Fund officials, Mr. Okamoto said, noting that many countries in Latin America had debt distress before coronavirus, which had exacerbated those pressures.

The DSSI is giving the IMF more time to assess the full debt picture for these countries, he said. “It’s lasting longer than we anticipated, and so that is going to change a bit the dynamics of what we think is sustainable in the long run.”

He said the Fund was continuing to ask rich countries to fund two specific Fund programs that lend to poor countries.The United States, the largest shareholder in the IMF, has signaled it hopes to contribute, but no funds have been provided for those programs so far. — Reuters

China has a new richest Person, with Jack Ma dethroned

September 24, 2020 | 11:56 am

A bottled-water and vaccine tycoon has become China’s wealthiest person in a day also marked by massive losses among the world’s tech elite.

Zhong Shanshan’s net worth reached $58.7 billion on Wednesday, $2 billion more than Jack Ma’s, according to the Bloomberg Billionaires Index. Mr. Zhong is now Asia’s second-richest person, behind India’s Mukesh Ambani, and is the 17th wealthiest in the world, ahead of Charles Koch and Phil Knight.

Nicknamed “Lone Wolf” for his eschewing of politics and clubby business groups, Mr. Zhong’s fortune has jumped $51.9 billion in 2020, more than anyone else in the world except Amazon.com Inc.’s Jeff Bezos and Tesla Inc.’s Elon Musk. Both suffered heavy declines on Wednesday as tech stocks stumbled and Tesla plunged after its “Battery Day” event fell short of expectations. Musk’s fortune dropped by almost $10 billion.

The initial public offering of bottled-water company Nongfu Spring Co.—which turned out to be Hong Kong’s most popular among retail investors—propelled Mr. Zhong to China’s top three richest earlier this month. That came after the April listing of vaccine maker Beijing Wantai Biological Pharmacy Enterprise Co. pushed his net worth to $20 billion by early August.

Mr. Zhong now leads a wealth ranking in China that is typically dominated by people who made their fortunes from tech companies.

While Mr. Zhong has surpassed Mr. Ma as China’s wealthiest, the tech tycoon might soon regain the top spot, which he’s held for most of the past six years after Alibaba went public in the US Ant Group’s IPO next month is poised to boost his fortune, with his stake estimated at $28 billion if the company achieves the $250 billion valuation people familiar with the matter have said it’s targeting.

Wednesday was brutal for US tech stocks, which tumbled the most since earlier this month. The plunge in Musk’s wealth was the biggest among the people on the Bloomberg ranking of the world’s 500 richest, followed by Mr. Bezos, whose net worth dropped by $7.1 billion. Musk is now worth $93.2 billion and Bezos $178 billion. Mr. Zhong added almost $4 billion Wednesday, more than anyone else in the index. — Bloomberg

Del Monte’s pandemic response: Nourishing consumers and communities

September 24, 2020 | 6:00 am

As the country locked down economic activity through various phases of community quarantine which was caused by the coronavirus pandemic, Del Monte Philippines, Inc. (DMPI) continued operating as a food company.

DMPI has operated without disruption to meet the surging demand for food to address people’s basic need to nourish themselves, strengthen their immune system and help fight the spread of the disease by consuming healthy and nutritious food and beverage products.

DMPI’s pandemic response helps sustain not only consumers, but frontliners and communities as well. To date, the company has donated food to over 220 local government units, NGOs and other beneficiaries through the Del Monte Foundation to support frontline workers and marginalized communities, helping over100,000 people. The company has so far supported medical frontliners in over 50 hospitals and healthcare facilities.

Through the Del Monte Foundation, DMPI donated PPEs and washable coveralls to doctors and nurses in Cagayan de Oro and Misamis Oriental in response to the appeal of health professionals to help them gear up for COVID-19.

The Del Monte Foundation also continued its mobile medical and dental missions during the pandemic, and organized educational sessions on COVID-19 awareness for about 200 barangay health workers in partnership with municipal health offices.

DMPI’s pandemic response is consistent with the Sustainable Development Goals (SDGs) of the United Nations. The SDGs are a call to action by all countries to end poverty and promote prosperity while sustaining the planet and its people.

DMPI is grateful to its employees for their hard work, especially during these times, as they pursue the company’s vision – Nourishing Families. Enriching Lives. Every Day. DMPI is also thankful to its consumers, business partners and all stakeholders for their support.

For more information, please refer to Del Monte Pacific Limited’s FY2020 Sustainability Report, “Sustaining our Future,” which was published this September. https://www.delmontephil.com/sustainability/sustainability-report

DMPI’s pandemic response promotes the UN Sustainable Development Goals.

Regional Updates (09/23/20)

September 24, 2020 | 1:00 am

Boracay open to domestic tourists under eased quarantine by Oct. 1

BORACAY ISLAND will be open for tourists from areas under relaxed quarantine levels — general community quarantine (GCQ) and modified GCQ — starting October 1, the Tourism department announced. The Boracay inter-agency task force approved the expansion from only residents of Western Visayas Region during a meeting on Tuesday after a request from the Aklan provincial government. “The reopening of Boracay to new market sources signals a gathering momentum for domestic tourism all over the country,” Tourism Secretary Bernadette Romulo-Puyat said in a statement on Wednesday. Travelers of all ages are allowed, but those below 21 and above 60 years old should have no comorbidity. Visitors will have to present a negative PCR test result released 48 to 72 hours before travel. Travelers are also advised to quarantine immediately after the test. The Godofredo P. Ramos Airport in Caticlan will be the only point of entry. There are so far 200 hotels and resorts with a combined 4,416 rooms on the island accredited by the Tourism department. The Tourism Congress of the Philippines (TCP), on the other hand, is tempering expectations for business operations and revenues with the reopening, noting the unpredictability of the pandemic. “At this point, having expectations is setting ourselves up for possible disappointment so we view the reopening of Boracay as an experiment,” TCP President Jose C. Clemente III said in a mobile message on Wednesday. — Jenina P. Ibañez

Cavite governor orders ‘indefinite’ closure of golf club for event violating quarantine rules

THE GOVERNOR of Cavite has ordered the temporary closure of a golf course, where his family is a member and has real estate holdings, for organizing an event that violated quarantine protocols. In a statement on Wednesday, Cavite Governor Juanito Victor C. Remulla, Jr. said he issued an executive order dated September 22 directing the closure “indefinitely” of Sherwood Hills Golf Club located in Trece Martires City. “We shall await the response of the club management before we decide to allow its re-opening,” he said. Mr. Remulla said the club held a “Members’ Day,” which was actually a tournament where 91 members participated. “The intent of the organizers from the beginning was to conduct a tournament but was disguised at the last minute in order to evade sanctions,” he said. National guidelines still prohibit social gatherings, including sports activities, beyond the venue’s 50% capacity. The governor also cited that “spectators in all non-contact sports and exercises shall be prohibited, thus organized play is NOT allowed.” Mr. Remulla himself disclosed in his statement his family’s affiliation with the club. “We are not exempt, nor anyone affiliated with us, from the rule of law,” he said. — Emmanuel Tupas/PHILSTAR

Samar areas join list of red tide zones

THE BUREAU of Fisheries and Aquatic Resources (BFAR) has warned consumers against eating shellfish collected in the coastal waters of Daram Island and San Pedro Bay in Samar after the two areas tested positive for red tide contamination. In its 19^th shellfish bulletin this year, BFAR said the two areas join the long list of red tide positive zones, namely: Puerto Princesa Bay in Palawan; Dauis and Tagbilaran City in Bohol; Tambobo and Siit Bays in Siaton and Bais Bay, in Negros Oriental; Cancabato Bay in Tacloban City; Matarinao Bay in Eastern Samar; Balite Bay in Davao Oriental; and Lianga Bay and the coastal waters of Hinatuan in Surigao del Sur. All types of shellfish and Acetes sp. or alamang harvested from these areas are not safe for human consumption, but all other marine species can be eaten with proper handling. — Revin Mikhael D. Ochave

Zamboanga City grants amnesty on property tax penalties until Dec. 31

THE ZAMBOANGA City government has started implementing an amnesty program for all penalties, surcharges and interests on all unpaid real estate taxes up to this year as part of its recovery plan from the coronavirus disease 2019 (COVID-19) crisis. The condonation program, which will be in effect until Dec. 31, is based on Ordinance 542 passed early this month by the city council after Mayor Maria Isabelle Climaco-Salazar certified it as urgent. In a statement from the local government, the City Treasurer’s Office appealed to all property owners “to avail of the amnesty, a rare opportunity granted by the local government to help delinquent owners settle their accounts at a lower cost.” The city council also approved an amnesty for penalties on transfer tax of real property for the period May 31, 2020 and prior years, with the payment deadline set Nov. 30.

National Government Fiscal Performance (Aug. 2020)

September 24, 2020 | 12:35 am

THE National Government’s budget deficit ballooned by 1,510% to P40 billion in August from a mere P2.5-billion shortfall a year ago, as revenues remained weak amid the economic slowdown, the Bureau of the Treasury (BTr) said. Read the full story.

Budget deficit swells to P40B in Aug.

September 24, 2020 | 12:35 am

By Beatrice M. Laforga, Reporter

The BTr cash operations report released Tuesday also showed the fiscal gap in August was slimmer than the P140.2-billion deficit in July.

Revenues slumped by 13% to P243.2 billion in August, as tax revenues dropped by 11% to P233.1 billion. Taxes collected by the Bureau of Internal Revenue (BIR) fell 9% to P187.9 billion, while the Bureau of Customs’ (BoC) collection was 17% lower at P44.4 billion.

Non-tax revenues, including privatization proceeds and fees and charges generated, slid by 44% to P10.1 billion in August.

The BTr’s income declined by 65% to P2.1 billion, which was attributed to a drop in remittances from Philippine Amusement and Gaming Corp. as well as lower government investments and deposits. Other non-tax revenues fell by 33% to P8 billion due to limited government transactions as offices observe health and safety protocols.

On the other hand, state spending inched up 0.38% to P283.3 billion in August, a slower pace than the 10% year-on-year uptick in July. This was attributed to the 15% rise in interest payments to P22.5 billion and the release of subsidies to the Philippine Health Insurance Corp. (PhilHealth) for the health insurance premiums of indigent beneficiaries under the National Health Insurance Program.

Overall spending was tempered by the 0.71% dip in primary spending that reached P260.8 billion.

The August tally brought the eight-month shortfall to P740.7 billion, surging by 515% from P120.4 billion logged a year ago. The fiscal gap was at P660.2 billion for 2019.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the year-to-date deficit accounts for 3.9% of gross domestic product (GDP) and is expected to remain below 4% this year as revenues are seen to improve while the “government keeps a lid on spending.”

Economic managers project the deficit to hit 9.6% of GDP by yearend.

In the eight months to August, overall spending climbed 21% to P2.671 trillion, on the back of the 22% rise in primary expenditures which reached P2.402 trillion. Interest payments also grew 8% to P269.6 billion.

As a share of expenditures, the Treasury said interest payments level declined to 10.09% as of August from 11.33% in the same period last year.

However, interest payments as a percentage of revenues inched up to 13.96% from 11.98% the year prior because of weak revenue collections.

Eight-month revenues slipped 8% to P1.931 trillion, dragged by the 12% decline in tax collections to P1.661 trillion. The BIR’s tax take dipped by 10% to P1.303 trillion, while the BoC’s collections dropped by 16% to P347.3 billion.

The Treasury said the BIR has so far collected 77% of its downward-revised P1.685 trillion target for the year. However, this is still just over half of the P2.576-trillion pre-pandemic goal. Customs’ eight-month revenues accounted for 69% of its revised goal.

“BIR needs a monthly average collection of P96 billion for the rest of the year to reach its revised full-year program. BoC has still to collect P158.9 billion, or P40 billion on average per month, to achieve its revised P506.2 billion program,” it said.

Finance Secretary Carlos G. Dominguez III told lawmakers on Wednesday that the country’s two biggest revenue agencies are confident they will be able to meet their reduced targets for the year despite the pandemic.

“If there’s anything that this COVID-19 pandemic did is to inject a large amount of uncertainty but I believe the new revised targets will be met by the end of this year,” he said.

The BIR and BoC exceeding their targets in the past two months and Metro Manila’s return to a modified enhanced community quarantine (MECQ) for two weeks has helped slim the deficit last month, said Robert Dan J. Roces, chief economist at Security Bank Corp.

“We do expect, however, that the deficit may be wider moving forward as government spending should begin to pick up over the course of the next few months, with the government — possessing enough fiscal leeway — filling the need to increase expenditures to help with growth momentum even as revenues remain stagnant with the economy in recession,” Mr. Roces said in a Viber message Wednesday.

The further reopening of the economy could give tax collections a boost in the coming months, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

“Barring any virus flare up that will cause further large-scale containment, like what is happening in the United Kingdom and other advanced countries, government revenues can be expected to steadily rise,” he said.

PSE eyes changes to listing rules

September 24, 2020 | 12:34 am

By Denise A. Valdez, Senior Reporter

THE Philippine Stock Exchange, Inc. (PSE) is proposing to require companies that will list shares on its main board to have a minimum P75-million three-year cumulative net income, replacing the minimum capitalization requirement.

The bourse operator released late Wednesday its proposed revisions to the listing rules of the main board and the small, medium and emerging (SME) board. The new rules are aimed at increasing the local market’s competency against regional peers.

Under the proposal, the PSE will give leniency to companies planning to list shares on the main board by removing the P500-million minimum market capitalization requirement.

It will focus on net income, instead of EBITDA (earnings before interest, taxes, depreciation and amortization), as a measure of profitability to protect investors. Companies that will be doing an initial public offering (IPO) must have a cumulative net income of P75 million for the three fiscal years before its listing application. Its net income in the latest fiscal year must also be at least P50 million.

The PSE is likewise proposing the imposition of a minimum total stockholders’ equity of P500 million to gauge the financial condition of a company.

For those listing under the SME board, the regulator is proposing to remove the requirement of a positive EBITDA in at least two of the last three fiscal years before a filing application. Instead, it is proposing to qualify an applicant if its cumulative operating revenues are at least P150 million in the last three years, with at least 20% average operating revenues growth rate over the last two years.

It will also reduce the number of years that a company has to be operational to two years from three years, and replace the requirement for a P100-million minimum authorized capital stock with a P25-million paid-up capital.

The PSE likewise wants to prohibit backdoor listing for companies that are listed on the SME board. In exchange, it will remove the restriction against changing the primary purpose and secondary purpose of companies seven years from listing.

Due to the coronavirus pandemic, IPO applications filed in 2021 and 2022 may be afforded some “time-bound relief.” The PSE may check a company’s profitability during any two fiscal years in the three most recent fiscal years and exclude the year when the coronavirus impact was felt.

The draft rules are available on the PSE website and open for public comment until Oct. 7.

Exiting POGOs to face BIR audit — Dominguez

September 24, 2020 | 12:33 am

THE Bureau of Internal Revenue (BIR) will still conduct an audit of Philippine Offshore Gaming Operators (POGOs) that are leaving the country to check their tax compliance and collect any back taxes, Finance Secretary Carlos G. Dominguez III said.

“Before a Philippine registered entity can close its business, it is required to get a clearance from the BIR. This triggers an audit where the BIR can determine if they have paid the correct taxes,” Mr. Dominguez told reporters via Viber Wednesday when asked about the exit of some POGO companies.

The Finance chief said more POGOs are exiting the country due to weak demand and the Chinese government’s crackdown against offshore gambling.

Mr. Dominguez said a building owner in Makati City reported that some POGOs and service providers have canceled their lease contracts due to lack of business.

“The issue is not so much on POGO revenues but more on the impact to real estate values and businesses. Obviously the income tax and VAT (value-added tax) collection from this sector will be affected,” he added.

A report by real estate consultancy firm Leechiu Property Consultants (LPC) showed demand for office space dropped 74% in the first six months of 2020 as POGOs began their exodus amid the pandemic.

Meanwhile, Philippine Amusement and Gaming Corp. (PAGCOR) Chairperson and Chief Executive Officer Andrea D. Domingo said in a text message there are only 29 POGOs allowed to currently operate, which generate an average of P50 million in gross gaming revenues (GGR) a month.

“Last year, P300 million ang monthly GGR [and] PAGCOR collected 2% from this as government share,” she added.

As of Sept. 8, PAGCOR data showed there were only 55 approved POGO licensees in the country, down from the 60 businesses registered previously. Only 203 service providers are also authorized to operate.

The government prohibited casino and offshore gambling operations when the strict lockdown started in mid-March. Operations of POGOs and their service providers were allowed to resume in early May, provided they observe safety protocols and submit a tax clearance.

The BIR requires POGOs to settle their tax arrears and pay the 5% franchise tax before they can be issued a tax clearance, but the industry refused to comply.

Mr. Dominguez said they are still estimating how much taxes they can collect from the POGO industry this year, after Senator Franklin M. Drilon asked if the collections will increase since the basis of 5% franchise tax was changed under the Bayanihan to Recover as One Act (Bayanihan II).

Tax collections from the POGO industry was one of the funding sources of the P165-billion Bayanihan II. Mr. Drilon said the law revised the basis of the 5% franchise tax to gross bets amid alleged cheating in the computations of net winnings.

The BIR collected P6.42 billion in taxes from POGOs last year, surging by 170% from P2.38 billion in 2018. — Beatrice M. Laforga

DoF cool to extending estate tax amnesty

September 24, 2020 | 12:32 am

THE Finance department wants to first see the results of the ongoing estate tax amnesty, which will end on May 31 next year, before Congress passes a measure extending it by another two years.

“In general, what we would have preferred for the amnesty law… is to play it out first. Rather than having the deadline… still next year and then you already extend it,” Finance Undersecretary Antonette C. Tionko told senators on Wednesday.

“I think the timing is more the issue. It’s just prolonging it, but we would have collected it already.”

Ms. Tionko was speaking before the Senate Finance Committee, led by Senator Juan Edgardo M. Angara, which was tackling the Department of Finance’s (DoF) proposed P16.01 billion for 2021.

Mr. Angara asked the DoF if it supported the measure extending the estate tax amnesty up to 2023 from its current 2021 deadline, which was already passed on third reading by the House of Representatives. No counterpart measure has so far been filed in the Senate.

Finance Undersecretary and Chief Economist Gil S. Beltran said in a phone message the department will “check first what is the outcome so far before any decision to extend.”

NEW SOURCES OF REVENUES
In the same hearing, Finance Secretary Carlos G. Dominguez III said the department will begin drafting proposals for additional revenue sources around 2021-2022.

“I think some time late 2021, early 2022, we will start looking at additional revenues to pay for the heavy indebtedness that we are incurring this year,” Mr. Dominguez said during the hearing.

Mr. Dominguez said, as of Sept. 20, the government has secured $9.9-billion financing through loans and grants from development partners and markets to fund its coronavirus response.

“In the next few months, we will be concentrating on improving tax administration and passing the remaining tax packages,” he told reporters over a phone message.

This includes the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, which will immediately cut the corporate income tax to 25% from the current 30%. This will further be reduced by one percentage point annually beginning 2023 until 2027.

The measure, which forms part of the government’s economic stimulus package, will generate P40-billion foregone revenues in 2020 and P650 billion in the next five years.

“The proposal to reduce the tax is really a part of our stimulus program to stimulate the economy. And really, this is trusting the private sector to make the right decisions with that money, to retain employees, re-invest in their companies,” Mr. Dominguez said in the hearing.

“We believe the economy will be stimulated and the additional investments will generate more taxes in the long run, and make us more attractive to foreign investments.” — Charmaine A. Tadalan

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