Poor

This time President Aquino blames a typhoon.

Asked about a recent survey showing a marked increase in the number of people who rate themselves as “poor,” Aquino pointed out that the survey was taken after Typhoon Yolanda struck the Visayas. He suggested that more people rated themselves as “poor” as a direct consequence of the natural calamity.

Fine.

It is, I suppose, the task of the polling company SWS to decompose their own data and check if the calamity is causal to the uptick in self-rated poverty.  That is surely a possibility. Only the SWS has the raw data to validate that.

Offhand, I am reluctant to buy into Aquino’s obviously well-crafted spin on the survey results. I have several reasons for that reluctance.

First, those who were poor before the typhoon and miserable thereafter would have rated themselves “poor” at any rate. The impact on the aggregate numbers would be negligible.

On the other hand, those who would have reported themselves as “not poor” before the calamity (the Romualdez clan of Tacloban, for instance) would very likely still rate themselves “not poor” after the calamity even as they might have suffered property damage. If the rich owned land, the asset still retains much of its value even if it might be presently inundated.

Second, the rising share of people who self-rate themselves to be “poor” is not a fluke occurring in the post-calamity period. It is a trend.

The massive rural-to-urban migration is a long trend, driven by deepening rural poverty. The deepening misery of the rural population might have been mitigated if the mother, and now the son, took land reform and rural asset transfers a little more seriously.

The continuing migration of Filipino labor is driven by high domestic unemployment. It has been pointed out again and again over the recent past that the respectable aggregate growth rate the Philippine economy has been posting does not translate into lower unemployment. Our spectacular unemployment and underemployment numbers might have been more scandalous had jobless Filipinos not been exporting themselves (the personal and social costs notwithstanding).

The biggest determinant of poverty is a high food price regime. Nothing was gained the last few years to bring down food costs. There is no articulated administration strategy to do that.

Lastly, the spike in self-rated poverty happens despite the hefty expansion of the conditional cash transfer program (which Aquino now seems to be touting as the centerpiece program of his administration in place of the failed PPP program). The conditional cash transfer program, it appears, is an efficient means to buy political support but not a tool to bring down poverty incidence.

Next time unsavory news (such as a spike in self-rated poverty rates) breaks out, Aquino’s spin masters might better serve their principal by supplying the hard data to support the propaganda line. Stop blaming typhoons for the large trends indicating exclusive rather than inclusive growth patterns. Those trends are arrested or abetted only by the quality of governance.

Underpaid

Difficulty handling the numbers is not the malaise of this administration alone.

Last week, the controversial Mighty Corporation proudly announced it had paid P8 billion in taxes last year for its lower-end cigarette enterprise. That would have been truly impressive if the announcement confined itself to that number. In fact, the number might have successfully branded Mighty as a responsible corporate citizen.

In the same announcement, however, Mighty Corporation could not resist bragging it had cornered 20% of the domestic cigarette market (up from only 3% the year before, when the new sin tax regime was not yet in place). That second part of the announcement brings the corporation into serious arithmetical problems.

Our domestic market consumes 100 billion sticks of cigarettes annually, undeterred by the stiff excise taxes. 20% of that number of sticks of cigarettes sold amounts to 20 billion sticks. At 20 sticks per pack of cigarettes, that accounts for 1 billion packs of cigarettes.

For low-end products, the excise tax for cigarettes is P12 per pack. For a billion packs of cigarettes (representing its 20% market share), Mighty Corporation should have paid P12 billion in excise taxes alone.

The numbers do not add up. If Mighty paid “only” P8 billion last year, then it underpaid its excise taxes by P4 billion (roughly the number the Department of Finance seeks to collect).

By crowing both about its market share and the taxes it paid, Mighty might have ended up indicting itself. No financial wizardry required here, just plain elementary grade arithmetic.

This just complicated the other numbers Finance is asking Mighty to explain. How could Mighty sell its cigarettes for only P14.70 a pack when excise and value-added taxes add up to P13.58? How could Mighty import tobacco at only $0.68 per kilo when others import theirs at $3.39? How could Mighty import cigarette filters at only $0.38 per kilo (according to the Bureau of Customs) when the cheapest global price is $5.36 per kilo?

Officials at the BoC and the BIR must be burning the midnight oil trying to make sense of the numbers Mighty provides for its manufacturing activities. If the excise and value-added taxes are deducted, the company appears to be making a profit selling its cigarettes at only P1.20 per pack.

The more numbers Mighty throws up, the more complicated its arithmetic becomes. Perhaps it is time for this corporation to hire some of President Aquino’s spin masters. They will say something glib with enough conviction and actually expect to get away with it.