Independent foreign policy? Foreign interests behind TRAIN, Cha-cha, says IBON

While President Duterte likes to claim that his administration adheres to an independent foreign policy, it appears that his major programs such as the packages of tax reforms and the planned Charter change (Cha-cha) are actually pushed by US and other foreign interests.

IBON noted that the tax reforms and Cha-cha are among the key policy reforms long lobbied for by US business groups with active support from American aid agencies. It cited the US’s Partnership for Growth (PFG) initiative, an aid program participated in and coordinated by the US Agency for International Development (USAID), State Department, Millennium Challenge Corp. (MCC) and other US agencies as well as the World Bank, International Monetary Fund (IMF) and various UN bodies.

Part of the PFG implementation is The Arangkada Philippines Project (TAPP) of the USAID and the American Chamber of Commerce (AmCham) through the Joint Foreign Chamber of Commerce (JFCC). Under the TAPP, the JFCC has produced Legislation Policy Briefs that identified broad recommendations for Congress and the Executive.

Among hundreds of specific policy proposals of the JFCC are comprehensive tax reforms that will raise excise tax on petroleum products, impose sin taxes (alcohol, cigarettes, and tobacco products), as well as broaden the base of the value-added tax (VAT), while reducing the corporate income tax. It also pushed for the lifting of constitutional restrictions on foreign investments through Charter change (Cha-cha).

IBON noted that the US remains a major player in the Philippine economy. In the past decade (2006 to 2016), American businesses have invested US$4.12 billion or 10.3% of the total foreign direct investment (FDI) that flowed into the domestic economy, the second biggest among all foreign investors. The US is also the second largest market for products from the Philippines, accounting for US$89.22 billion or 15.6% of the country’s total exports in the past 10 years.

Both the pro-business tax reforms of the Duterte administration and Cha-cha for greater economic liberalization will further benefit US corporations. This includes lower corporate income tax that will be offset by heavier indirect taxes at the expense of the public, and the opening up of additional sectors of the economy for US investments and profits, said IBON.