Death and Taxes Top Duterte’s Policy Agenda Midway Through Term

Claire Jiao and Andreo Calonzo
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Death and Taxes Top Duterte’s Policy Agenda Midway Through Term

(Bloomberg) -- Philippine President Rodrigo Duterte vowed to reimpose the death penalty to double-down on his war on drugs as he enters the midpoint of his six-year term.Duterte also asked Congress to lower corporate income taxes and raise levies on alcohol and tobacco in his annual State of the Nation Address on Monday. The revenues will help fund plans to create new departments and raise salaries for public school teachers and nurses, he said.“I will not stop until we reach the finish line. That is when I will call it a day,” Duterte said during his speech that lasted more than an hour. He capped off the event by serenading lawmakers with his rendition of "Moon River."Leaders for both houses of Congress were elected before Duterte’s address. Vicente Sotto retained the Senate Presidency, while former Foreign Affairs Secretary Alan Peter Cayetano won as House Speaker after being nominated by the President’s son Paolo Duterte, who was named deputy.According to analysts, Duterte will likely avoid a lame-duck phase in the second half of his term, leveraging high approval ratings and a super-majority in Congress to seal his policy agenda.“The President will be more gung-ho after securing a new mandate in the midterms,” University of the Philippines assistant professor in political science Jean Encinas-Franco said. “He will want to tick off all the items in his platform before 2022.”Death penaltyDuterte wants to revive the death penalty, which the Philippines suspended in 2006, for heinous crimes related to drugs and plunder, saying it will instill fear among would-be perpetrators.The administration could find it easier to pass the bill now with more supporters in the Senate, which previously blocked the measures. However, Franco said legislators will have to weigh the president’s wishes against a lack of support from the church, civil society groups and the wider public.Tax reformAfter the first bout of tax reform was blamed for the inflation spike in 2018, lawmakers have been wary to approve succeeding measures. One of the most contentious has been the plan to lower company taxes while cutting incentives, opposed by manufacturers and call center firms which stand to lose perks.There are also bills to hike alcohol and tobacco taxes, simplify capital income levies, and implement a tax amnesty program. “Who smokes here? They should be exterminated from the face of the earth,” Duterte said.According to Foundation for Economic Freedom president Calixto Chikiamco, the entire array of tax reforms could still be passed before 2022 since the economic team enjoys strong backing from Duterte.Bigger governmentThe President called for lawmakers to “right-size the Manila-centric bureaucracy” while at the same time endorsed the creation of new departments. The three proposed agencies will focus on water resource management, disaster resilience and migrant worker protection.Duterte also promised to increase salaries of public school teachers and nurses, following his earlier move to double the pay of police, military and other uniformed personnel.Oil explorationDuterte, in a media briefing after his speech, said he wants oil exploration with China in the South China Sea during the last year of his term in 2022, and that he’s okay with a 60-40 revenue-sharing scheme.He also said in his address that “there are no ifs and buts” in the Philippines’ claims to the sea, but his nation can’t drive away Chinese vessels from contested waters because this will “lead to violence.”FederalismDuterte didn’t mention the proposal to shift to a U.S.-style federal form of government in his address, then later told the media that the shift would have to happen after he’s term, saying that he’s already “out of it.” The plan, which aims to spread economic growth outside the capital, has been opposed by senators and economic managers over issues of cost and implementation.(Updates with Duterte comments on joint oil exploration.)\--With assistance from Clarissa Batino, Ditas Lopez and Cecilia Yap.To contact the reporters on this story: Claire Jiao in Manila at cjiao5@bloomberg.net;Andreo Calonzo in Manila at acalonzo1@bloomberg.netTo contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net;Cecilia Yap at cyap19@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

(Bloomberg) -- Philippine President Rodrigo Duterte vowed to reimpose the death penalty to double-down on his war on drugs as he enters the midpoint of his six-year term.

Duterte also asked Congress to lower corporate income taxes and raise levies on alcohol and tobacco in his annual State of the Nation Address on Monday. The revenues will help fund plans to create new departments and raise salaries for public school teachers and nurses, he said.

“I will not stop until we reach the finish line. That is when I will call it a day,” Duterte said during his speech that lasted more than an hour. He capped off the event by serenading lawmakers with his rendition of "Moon River."

Leaders for both houses of Congress were elected before Duterte’s address. Vicente Sotto retained the Senate Presidency, while former Foreign Affairs Secretary Alan Peter Cayetano won as House Speaker after being nominated by the President’s son Paolo Duterte, who was named deputy.

According to analysts, Duterte will likely avoid a lame-duck phase in the second half of his term, leveraging high approval ratings and a super-majority in Congress to seal his policy agenda.

“The President will be more gung-ho after securing a new mandate in the midterms,” University of the Philippines assistant professor in political science Jean Encinas-Franco said. “He will want to tick off all the items in his platform before 2022.”

Death penalty

Duterte wants to revive the death penalty, which the Philippines suspended in 2006, for heinous crimes related to drugs and plunder, saying it will instill fear among would-be perpetrators.

The administration could find it easier to pass the bill now with more supporters in the Senate, which previously blocked the measures. However, Franco said legislators will have to weigh the president’s wishes against a lack of support from the church, civil society groups and the wider public.

Tax reform

After the first bout of tax reform was blamed for the inflation spike in 2018, lawmakers have been wary to approve succeeding measures. One of the most contentious has been the plan to lower company taxes while cutting incentives, opposed by manufacturers and call center firms which stand to lose perks.

There are also bills to hike alcohol and tobacco taxes, simplify capital income levies, and implement a tax amnesty program. “Who smokes here? They should be exterminated from the face of the earth,” Duterte said.

According to Foundation for Economic Freedom president Calixto Chikiamco, the entire array of tax reforms could still be passed before 2022 since the economic team enjoys strong backing from Duterte.

Bigger government

The President called for lawmakers to “right-size the Manila-centric bureaucracy” while at the same time endorsed the creation of new departments. The three proposed agencies will focus on water resource management, disaster resilience and migrant worker protection.

Duterte also promised to increase salaries of public school teachers and nurses, following his earlier move to double the pay of police, military and other uniformed personnel.

Oil exploration

Duterte, in a media briefing after his speech, said he wants oil exploration with China in the South China Sea during the last year of his term in 2022, and that he’s okay with a 60-40 revenue-sharing scheme.

He also said in his address that “there are no ifs and buts” in the Philippines’ claims to the sea, but his nation can’t drive away Chinese vessels from contested waters because this will “lead to violence.”

Federalism

Duterte didn’t mention the proposal to shift to a U.S.-style federal form of government in his address, then later told the media that the shift would have to happen after he’s term, saying that he’s already “out of it.” The plan, which aims to spread economic growth outside the capital, has been opposed by senators and economic managers over issues of cost and implementation.

(Updates with Duterte comments on joint oil exploration.)

--With assistance from Clarissa Batino, Ditas Lopez and Cecilia Yap.

To contact the reporters on this story: Claire Jiao in Manila at cjiao5@bloomberg.net;Andreo Calonzo in Manila at acalonzo1@bloomberg.net

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net;Cecilia Yap at cyap19@bloomberg.net

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.