Category: Health Issues

Tough love? MWSS, water firms clash over taxes, disallowed costs

mcmangahas Leave a comment

WATER IS LIFE, indeed, but it is not cheap, not free.

Water is a story that has hogged the headlines in recent weeks. And that is all because of a new petition to adjust water service fees, amid a new round of rate rebasing talks between the government and the two water firms in Metro Manila, to the vigorous protest of consumer groups.

Water, indeed, is about big money and big players that had been allowed by government to pass on to consumers the big amounts of income taxes due from their operations.

This time, however, the government regulator, the Metropolitan Waterworks and Sewerage System (MWSS), seems poised to do its job — regulate the water firms.

The MWSS has asked for the financial records and documents of the water firms, issued disallowance notices for some of their expenses and donations to charity, and questioned the fat salaries of their executives.

Most important of all, in an apparent show of tough love, the MWSS seems ready to stop the water firms from billing their income taxes as operations costs — billions of pesos that they have been passing on to consumers since 2007.

This report by PCIJ Fellow Roel Landingin comes with two data graphics, and a sidebar about what rate rebasing is.

Read our latest report:

* Tough love: MWSS, water firms clash over taxes, disallowed expenses

* Sidebar: What is rate rebasing?

Manila Water, whose income tax holiday ended in 2006, has effectively been passing on its income taxes to consumers from 2007 to 2012, said water regulators. Its total provision for income taxes during the six-year period was P7.3 billion, according to the company’s annual reports submitted to the Philippine Stock Exchange.

Maynilad, which was losing money for a number of years, enjoys an income tax holiday until 2016. The rates approved for Maynilad, however, included a provision for income taxes as its income tax holiday was approved after the rates were set in 2008. Its provision for income taxes amounted to only P1.7 billion from 2007 to 2011, the latest available filed with the Securities and Exchange Commission.

This month the MWSS is expected to announce water rate adjustments. The new rates are supposed to take effect next month. Consumer groups have asked the Supreme Court to freeze water rates, with a plea for a temporary restraining order, but the tribunal has not acted on their plea.

And while the MWSS resolution on income taxes will cut water rate adjustments, regulators cannot yet say if it is big enough to actually lower prevailing rates or may simply temper tariff increases.

The regulators also have to adjust the applied discount rate (ADR), the guaranteed return that water companies are allowed to earn, to take into account the change in the water firms’ tax status. This could partially offset the rate-lowering effect of disallowing them from passing on income taxes to customers.

UNDP: PH still behind in human development

Ed Lingao Leave a comment

UNDP

THE PHILIPPINES still has a long way to go while some of our neighbors in Asia have zoomed their way towards becoming the fast-rising new powers in the global stage.

According to the United Nations Development Programme (UNDP) 2013 Human Development Report, “The Rise of the South: Human Progress in a Diverse World,” there has been a “profound shift in global dynamics by the fast-rising new powers of the developing world and its long-term implications for human development.”

In its 22nd edition, the UNDP report noted that there have been 40 developing countries which earned significant strides in human development and are expected to continue to grow. The report further said that by 2030, the southern countries will be hosts of at least 80 percent of the world’s middle class.

Here in the Asia Pacific region, the report noted the strides in improvement of the Human Development Indices of China, Indonesia, Malaysia, Vietnam and Thailand. Although having significantly lower incomes than the middle class of the northern countries, the UNDP report expects the Asia Pacific region will have “billions of people becoming increasingly educated, socially engaged and internationally connected.”

“By 2020, the combined economic output of three leading developing countries alone—Brazil, China and India—will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States. Much of the expansion is driven by new trade and technology partnerships within the South itself,” United Nations Development Programme (UNDP) administrator Helen Clark writes in the report’s foreword. The UNDP report covered a total of 186 countries.

“China has already overtaken Japan as the worlds second biggest economy while lifting hundreds of millions of its people out of poverty. India is reshaping its future with new entrepreneurial creativity and social policy innovation. Brazil is lifting its living standards through expanding international relationships and antipoverty programs that are emulated worldwide,” the UNDP report reads.

However, in the same UNDP report, Philippines lagged behind some of its Southeast Asian neighbors at 114th for the fifth consecutive year with a Human Development Index (HDI) score of 0.654. The report further noted that this improvement is “still slightly below the East Asia and the Pacific regional average of 0.683.”

Here are the other findings of the UNDP for the Philippines:

  • Life expectancy in the country is at 69 years old.
  • The country ranked 77th in the Gender Inequality Index. This ranking is the third lowest rank when compared to other neighbors in Southeast Asia.
  • At least 18.4 percent of the country’s population earned below US$1.25 from 2011 to 2012.
  • Subsequently, around 9.1 percent of the total population is vulnerable to poverty while 5.7 percent are living in severe poverty
  • The country’s Gross National Income per capita level is US$3,752.
  • Debt servicing was the highest priority in terms of public spending which accounts for 6.5 percent of the Gross National Product in 2009,while its education spending is inversely proportional averaging 2.5 percent of the GDP from 2005 to 2010.

In its latest report, UNDP also predicted there would at least 126.3 million Filipinos by the year 2030.

Along with five Southeast Asian countries, the Philippines has been ranked as a medium human development country. Thailand, with an HDI score of 0.690, has been ranked at 103, while Indonesia—tied with Kiribati and South Africa—is ranked 121 with an HDI score of 0.629. Not far behind is Vietnam ranked at 127 with an HDI score of 0.617 and Cambodia, which is ranked 138 with an HDI score of 0.543, is tied with India.

Only Malaysia—ranked 64th with an HDI score of 0.769 and tied with Libya and Serbia—was ranked as a high development country.

Read the full UNDP report here.

Gov’t claims partial success with CCT dole outs

Ed Lingao Leave a comment

by Edz dela Cruz

POOR COMMUNITIES covered by the government’s Conditional Cash Transfer (CCT) program are registering higher attendance in schools than communities that are not part of the program, says the Department of Social Welfare and Development.

This, among other indicators, would show that the main targets of the controversial multi-billion peso program are already benefiting from the dole outs given under the CCT, said Social Welfare Secretary Corazon “Dinky” Soliman.

Soliman said findings from a recently completed Impact Evaluation Report of the CCT program by the Department of Social Welfare and Development showed that the program was “on track.” The findings were presented to the press by the DSWD and the World Bank last March 1, 2013.

Soliman says that a survey conducted by the DSWD on the target beneficiaries of the program showed significant progress in getting beneficiaries to avail of health and educational programs offered by the government in exchange for their participation in the CCT.

The CCT program, also known as the Pantawid Pamilyang Pilipino Program (4Ps), grants selected indigent families a modest monthly amount provided the families send their children to school and regularly visit health centers. The cash grants include P500 a month per family to cover health and nutrition costs, and an additional P300 for every child who is sent to school for a maximum of three children. All in all, an eligible family can claim a maximum of P1,400 from the program.

The program is meant as a safety net of sorts to prevent poor Filipinos from sliding deeper into penury.

The findings presented to the public were based on a study of 1,418 households in Lanao del Norte, Mountain Province, Negros Occidental, and Occidental Mindoro.

Among the findings presented by the World Bank and DSWD to the media:

  • In Pantawid barangays, 76 percent of preschoolers are enrolled in daycare, compared to 65 percent in non-Pantawid areas.
  • Up to 98 percent of children in Pantawid barangays are enrolled in primary school, as against 93 percent in non-Pantawid barangays
  • Some 64 percent of pregnant mothers in Pantawid barangays had antenatal care compared to only 54 percent in non-Pantawid barangays
  • For deworming, 85 percent of children in Pantawid barangays have undergone the procedure versus only 80 percent in non-Pantawid areas
  • Lastly, 81 percent of children in Pantawid barangays have taken Vitamin A supplements as against 75 percent in areas not covered by the program.

“I am pleased to know that the children of poor families are indeed enjoying better and improving access to education and better health services through Pantawid Pamilya,” Soliman said in a statement distributed to reporters.

The program has been under fire since its introduction under the administration of President Gloria Macapagal Arroyo in 2008. Criticisms range from the dole-out nature of the program to allegations that the selection of target beneficiaries are politically colored. Read the PCIJ investigative reports on the CCT program here.

The CCT program has been dubbed “the cornerstone of the government’s strategy to fight poverty” and attain the Millenium Development Goals that the country has pledged to achieve by 2015.

The CCT remains as the Aquino administration’s flagship program to alleviate poverty. In 2010, the program was given a P10.92-billion budget for 900,000 beneficiaries with another P21.19 billion to expand the program to 2.3 million beneficiaries in 2011. Last year, the government allocated P39.45-billion for 3.1 million beneficiaries.

This year, the budget increased to P55.97-billion, 12.2% higher than the 2012 allocation, triggering more debates among government officials and lawmakers, and raising questions on whether the cash grants were already being used as political leverage for this year’s elections.

Aside from the annual budget provided by the national government, the program is also supplemented with loans from the World Bank (WB) and Asian Development Bank (ADB), amounting to $805-million altogether. Loans from the WB will be repaid in 25 years, including a 10-year grace period, while loans from the ADB need to be repaid in 20 years, including a five-year grace period.

The massive cash inflow and the selective targetting of beneficiaries have raised quite a few eyebrows. During the open forum, a member of an organization for persons with disabilities asked for proof that all that cash was really resulting in improvements in the lives of those from the marginalzied sector: women, persons with disabilities, and indigenous people.

Another participant said the government should not just measure the success of the program based on the number of children being sent and kept in school and getting health services, but also on whether all that money flowing out was stabilizing living conditions and promoting self sufficiency among beneficiaries.

Soliman, on the other hand, explained that the assessment is only first of three sets, and adjustments are still to be made on the other two to measure the impact more accurately.

According to Pantawid Pamilya National Manager Rodora Babaran, the DSWD has already conducted re-assessment and validation surveys to correct inclusion and exclusion errors in targeting beneficiaries.

“There is no such thing as a perfect system.” Babaran added, noting that errors for programs such as 4Ps are unavoidable.