POSTSCRIPT / October 28, 2004 / Thursday


Philippine STAR Columnist

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The top brass themselves inflicted damage on AFP

FACE THE MIRROR: The generals and their barkers are screaming about saving the armed forces as an institution, sparing them trial by publicity, distinguishing between the corrupt and the clean officers, et cetera.

These supposed officers and gentlemen should look at themselves in the mirror — like they do before formation — and tell themselves the same things.

If they cared at all for the uniform, the institution, their integrity and all that, they should not have indulged in those corrupt practices that are now bringing shame on the armed forces.

All these decades, some cliques dominated by graduates of the Philippine Military Academy virtually destroyed the armed forces. For what? For personal gain.

Posted to key positions by their seniors from the academy, the crooks were able to institutionalize graft and refine the modus operandi.

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ALL FOR ONE: It is sad that hoodlums in uniform have been able to corrupt their mistahs who would have remained as idealistic as when they stepped out of the academy.

Those who did not have the moral fiber to resist have been swallowed by the system.

The same culture that seeks to preserve the system and protect those operating in it has been used to establish a network designed to bring in dirty millions for those who choose to play along.

Since they are all in it, they have to stand or fall together. As in battle, those inside the ring of fire must protect one another. This camaraderie they carried over from four years of cadetship (at a cost of P2 million per head) in the academy.

This is the only explanation why generals, possibly including some chiefs of staff, retire with millions falling out of overstuffed oversized pockets.

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WHY SHUT UP?: The “pabaon” tradition that ensures that a retiring chief of staff will be richer by several millions — without a peep from anybody — is an example of how the crooks collect money by the millions through a system created and refined by them almost to perfection.

How come money intended for the soldiers in the field is illegally “converted” for some other use, sometimes pocketed outright? Since the syndicate worked out the conversion for the beneficiary and themselves, no dissenting voice is heard within the system.

Some of them would even have the gall to deny that “conversion” takes place. Or to say with a poker face that there is no such thing as the “pabaon.” For men in uniform, their lying is unbelievable!

Now they want us private citizens to just keep quiet about a system that devours the many good men doing their job with dedication, that channels millions in taxpayers’ money and suppliers’ commissions to the bank accounts of generals?

They even have the temerity to threaten us poor citizens with a coup d’etat if we protest too much?

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TAX EVASION: If we are that desperate to raise so-called “sin taxes,” why are we cracking down only on cigarettes and alcoholic drinks? There are sins bigger than smoking and drinking.

For instance, why not go also after motels and inns of the “short-time” or wash-up variety?

If the Church itself has no qualms about accepting hefty donations from the Motel King and giving him a papal award in the process, why is not government chasing the sinful millions that his and other motels rake in DAILY?

The obvious reason why motels are left untouched, why their failure to issue official receipts is tolerated and their books hardly audited, is that these shady establishments are rich and ready sources of graft money.

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ARROYO FORMULA: Meantime, it seems that President Arroyo has succeeded in convincing the major cigarette makers to agree to a compromise formula on what would be a fair tax increase on tobacco products.

My source said the President looked pleased after her meeting with officials of Fortune Tobacco and Philip Morris to convince them to lower their resistance to an increased levy.

Talking to the two top cigarette-makers was like talking to the whole industry already. (Philip Morris was represented by managing director Chris Nelson, while Fortune owner Lucio Tan, who was abroad, sent his son Michael and his brother Harry.)

The two firms control 90 percent of the market. Fielding 19 nationally sold brands, Fortune has 54 percent of the market, while Philip Morris has 36 percent with its Philip Morris and Marlboro brands. La Suerte is a poor third with a 6-percent share.

The so-called sin taxes (only on tobacco products and alcoholic drinks) are among the two or three tax measures that Congress threatens to pass before the year ends.

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HOUSE DEBATES: The campaign to pressure the P49.6-billion (gross sales) tobacco industry to wave the white flag started with the finance department proposing a 30-percent tax increase.

After scaring the tobacco industry, the department softened a bit by suggesting that maybe 20 percent would be a reasonable compromise. The ball was then passed to Congress.

Emerging from a closed-door session last Monday, the House powerful ways and means committee made it known that it was pushing a 20-percent across-the-board increase starting in 2005 with increments of 3 percent every year until 2007.

Floor debates started last night, a signal that lobbyists better leave the finance department and start talking to the proper House members.

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TAX TO DEATH: The industry pleads that a 20-percent tax hike would kill it by pricing cigarettes beyond the reach of most smokers. (Notable exceptions will be few moneyed smokers expected to stick to their premium imported brands despite a big price increase.)

It said that this would affect some 60,000 farmers, 150,000 factory workers, 90,000 traders and others in ancillary services — aside from idling part of the 40,000 hectares of tobacco land in Ilocandia and 22 other provinces.

It added that a drastic drop in sales would translate to reduced tax revenues, now totaling around P19.7 billion. A situation would thus be created, it said, making the sale of cheaper smuggled cigarettes a lucrative business.

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FOREIGN PRESSURE: With foreign Shylocks pressuring her to pass tax measures pronto, President Arroyo called the top two cigarette makers to a caucus to speed up passage of whatever tax rate would eventually be imposed on tobacco products.

My source said the Philip Morris managing director appeared concerned that the plan to slap a 20-percent increase in taxes across the board would make Philip Morris and Marlboro (which are priced higher than the cheaper brands of Fortune) too expensive.

The President must have expected that kind of resistance, since she then brought out a ready compromise formula.

She proposed instead a 12-percent increase across the board plus 40 centavos per pack for 2005. From 2006 to 2010, she suggested a 3-percent increase (based on 2004 rates) every year.

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CONSENSUS: Since there were no serious objections to the compromise, my source got the impression that a consensus had been reached.

If the Arroyo formula would eventually be adopted, that would mean that each pack of cigarette would cost some P3 more starting next year.

Making quick calculations, we see the supposed compromise not much of a “watered-down” formula since it would bring in more revenue than a straight 20 percent across-the-board.

Under the original Finance idea of slapping a 30-percent tax increase, the government would have realized around P5.7 billion in 2005. At the reduced 20-percent, the collection would be down to P3.8 billion. But with the Arroyo formula, collections would amount to P4.5 billion.

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(First published in the Philippine STAR of October 28, 2004)

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