Let’s get together–and break the gridlock

House of Representatives, Republic of the Philippines
(Delivered during the opening of the Second Session of the Twelfth Congress)

This is a somber time for our nation as we begin the Second Session of the Twelfth Congress aware of our people’s deepening anxiety about our future.

As their elected representatives, we have witnessed their degrading poverty and anger at economic injustice that did not disappear with past opportunities at renewing the nation’s life.

The question now comes: What is demanded of this Congress?

Truly, we need to confront decisively the hard issues – poverty, crime and terrorism; health, housing for the poor and education for our children; gridlock, political stability and steady economic growth.

And we must prove that politics is not about winning elections and dividing the spoils of office – but it is about making governance work for our people, to better the lives of Filipinos and build this country for the next generation.

Admittedly, this is a moment of crisis – a crisis of confidence in our democratic institutions, and in our capacity to use these institutions to uplift our people’s lives.

But times of crisis are also times of opportunity.

In this Second Session, this House of Representatives must seize the opportunity to move this nation to where we want it: to be at par with the leading economies of Southeast Asia.

This is not a moment for playing partisan games with the nation’s future. This is a moment for us to get together to break the gridlock and get things done.

Our legislative agenda. We must be a House of innovative and far-reaching reform, and not a House of reaction.

Our immediate task is to trim the enlarging budget deficit. We are still far from year-end, but it already stands at P107 billion – huge enough to threaten cuts in public spending for peace and order, basic education, public health and infrastructure.

Our tax effort, already one of the poorest in Southeast Asia, further slipped to an alarming 13.5 percent, while our revenue collections from January to May fell P35 billion short of target.

Clearly some hard urgent solutions are called for.

Thus, my colleagues, we propose to modernize our tax system topped by a major re-structuring of the Bureau of Internal Revenue to give it greater autonomy and flexibility and free it from political control. This will require the creation of a Revenue Board to manage the BIR as a corporation under a CEO, following the corporate setup of tax agencies that have been successful in several countries.

We will file this bill in a few days and I ask everyone, majority and minority, to co-author or support this bill.

For we must make sure that the BIR collects the right taxes and puts them where they should go: in government coffers, and not in someone else’s bank account.

At the same time, we note that every year government loses up to P90 billion to value-added tax evasions. This is unforgivable and needs urgent rectification. We have to re-evaluate the value-added tax – and consider a shift back to sales taxes.

Over the past five years, the value of our specific taxes has been badly eroded by inflation. We need to restore its value. We may now have to index the specific taxes on cigarettes and alcoholic beverages to the current price levels – as agreed upon in last year’s Socio-Economic Summit.

Restoring the economy to growth mode. We must restore investor confidence. We must buckle down to the "hard" microeconomic reforms that other Asian states have completed – and which are responsible for the 6-7 percent growth that India, with an incredible handicap of a billion citizens to support, has been enjoying over this last decade.

We must mobilize our internal resources – not relying solely on outside funding – to create economic wealth.

One urgent way is to increase the country’s savings rate, which is one of the lowest in the region, to lay the foundation for a capital pool. In spite of its decline, it is savings, savings, savings, and exports that are saving and propelling the Japanese economy.

Let us act now on the proposed Personal Equity Retirement Act to encourage Filipinos to increase personal savings – and give them a choice for sound, responsible investments and retirement plans.

At the same time, let us now act on the bill to induce micro-enterprises in the underground to surface and flourish through non-tax incentives, access to credit, technical training, and marketing assistance.

This is the core of the Community-Based Business Enterprises Act, patterned after the successful Italian model, to make available support for small enterprises in every town. It is natural for congressmen and congresswomen to mobilize our constituent-entrepreneurs in the countryside.

SPAV & solving the NPLs. In our first year, our House took the initiative and the lead in East Asia in a private-sector led program to solve the almost P600-billion non-performing loans and foreclosed real estate mortgages of the banking system, without using government funds.

The SPAV is the mechanism by which NPLs can be turned into a capital pool, becoming performing assets once again to stimulate economic growth, re-open the foreclosed factories and re-hire the laid-off workers, create jobs, build mass housing for the poor and new infrastructure.

We passed it in the House – but it remains overtaken by the crisis in the Senate.

Malaysia has again led the way but via government action. Their Asset Management Group or SPAV has acquired non-performing assets at 40 cents to the US dollar which are now being sold at 60 to 65 cents to the dollar, their banks rescued, merged, and recapitalized and flourishing again.

It goes without saying that because of its critical importance to the economy, we will not stop until the SPAV becomes law. (To be Continued)