The Aquino administration has failed miserably in its efforts to boost the agriculture sector, registering one of the lowest average farm growths in almost three decades.

At the Tapatan sa Aristocrat forum on Monday, former Agriculture Secretary William Dar said in the five-and-a-half years of the Aquino administration, the farm sector only posted a growth of 1.6 percent.

“We grew more than 6 percent in terms of GDP, the whole country; but the growth of agriculture has been very pathetic. Last year the growth was only 0.11 percent, and to look at the last five-and-a-half years, it has only grown an average of 1.6 percent; so this is clearly a very dismal performance of this administration in terms of agriculture,” Dar said.

Dar added that in the post-Ferdinand E. Marcos period, agriculture growth averaged 2.7 percent, significantly higher than the recent performance of the sector.

He said agriculture growth averaged 1.8 percent under former President Corazon C. Aquino; 0.8 percent under then-President Fidel V. Ramos; 6.5 percent under former President Joseph E. Estrada; and 2.8 percent under former President Gloria Macapagal-Arroyo.

The former agriculture secretary said every administration must aim to grow agriculture by an average of 4 percent to increase the farm sector’s contribution to GDP.

Dar added that the sector used to account for around 20 percent of GDP. However, in recent years, its contribution has declined to around 10 percent of GDP.

Nonetheless, Dar said if the sector’s value addition to industry through food manufacturing is given a boost, this would increase the sector’s contribution by 15 percent to 20 percent.

With this, the total contribution of agriculture to the economy could be around 25 percent to 30 percent of GDP.  Apart from growth, the farm sector accounts for about a third of the country’s poor. Dar said around 40 percent of farmers are poor.

So clearly, he added, that focusing on the farm sector can help the next administration make economic growth more inclusive.

“Agriculture is really such a big sector not to be given priority by the government,” Dar said.

Apart from boosting the farm sector and lifting millions of farmers from poverty, the next administration must also address inequalities in the tax system.

Punongbayan and Araullo President and CEO Ma. Victoria Españo said the next administration’s economic agenda must include a comprehensive tax reform.

Españo said lowering income tax is not enough to make the tax system fair for all Filipinos. There should be reforms made on the tax rate, tax brackets and even exemptions to make the tax system more equitable.

“The proposal that we hear is we should lower the tax of employees. Normally, people would think if you have so many public services to finance, where will the government get the funding? And that’s why there’s a lot of opposition from the government whenever that proposal is raised. So we would always say we need a comprehensive tax reform,” Españo said.  In a recent Senate Centennial Lecture Series on Tuesday, experts from the Philippine Institute of Development Studies (PIDS), Department of Finance and the Tax Management Association of the Philippines agree that the country’s tax system needs to be changed.

The country’s personal income tax (Pit), specifically, has not been updated since the 1997. This has resulted in what is called “bracket creep,” where low-income taxpayers “hurt more” than their high-income counterparts. Bracket creep, PIDS senior research fellow Rosario G. Manasan explained, has occurred because of the “nonindexation” to inflation of Pit brackets.

This means that the coverage of each tax bracket does not take into consideration the current value of the peso.  Manasan said this presents a problem because the current value of the Philippine peso, using the 2014 Consumer Price Index, is already less than half of its value in 1998.

This means that an annual income of P210,000 a year in 2014 is only equivalent to P105,000 in 1998.

With this, taxpayers earning P210,000 should only be paying P15,500 worth of tax, or 14.8 percent, instead of P40,000, or 19 percent.

As published in Business Mirror dated 29 February 2016 by Cai U. Ordinario