It was a State of the Nation Address (Sona) that showed President Ferdinand Marcos Jr. understood the anxieties of ordinary Filipinos and recognized the issues they wanted the government to prioritize.
Marcos did not speak only of investments and economic growth, he also admitted that Filipinos were burdened by the rising cost of living, high electricity bills and the taxes deducted from salaries. He then proposed several measures that the executive and legislative branches could pursue to provide relief from these worries.
Many observers considered it a good speech and the bursts of applause at key points during the Sona delivery were understandable. Much of what Marcos said was exactly what the people wanted to hear. But the promises in the Sona came without the accounting.
Marcos did not speak of who will ultimately pay for these promises or if the relief will eventually be passed on to consumers. These are among the possibilities: The government shoulders the cost, businesses or utility companies absorb it, or the taxpayers pay for it now or in the future.
In his Sona, the President proposed raising the annual tax-exempt income threshold from P250,000 to P350,000 to give working families more disposable income. He also proposed exempting qualified small businesses from the minimum corporate income tax, granting tax abatements and removing system-loss charges and the corresponding value-added tax from electricity bills. These measures directly address the burdens that Filipinos feel every day.
What he did not adequately explain was how the relief measures would be financed, who would absorb their costs and what sacrifices might have to be made.
For example, it would not benefit the public if the removal of system-loss charges were to lead to the cancellation of priority projects. The trade-off could be to impose budget cuts on the building of new roads and infrastructure, the setting up of programs to address climate change and projects empowering farmers and fisherfolk.
On removing the systems-loss charges from electricity bills, there is the question of who will cover the cost. Will the same charge simply be renamed on our electricity bill or will the government give utility companies a subsidy?
As for the tax relief proposals, will these lead to a reduction in government collections? This will not help cover the projected 2026 deficit of about P1.6 trillion. And as the economy suffers, government may have to resort to more borrowing which could in turn affect consumers, impose cuts in other budgets, or introduce new taxes later as the fiscal problem worsens.
Marcos also mentioned the recovery of stolen money with more than P800 million already turned over to the national treasury. This amount is miniscule compared to the reported P25 billion in assets connected to flood control investigations.
A good Sona tells the people that their government is listening. A better address to the nation tells them where the money will come from, who will absorb the costs and what trade-offs will be necessary.