A Living Wage: Enough to Die For – Sinukat Ka Nguni’t Kulang

by Crispin Fernandez, MD

| Photo by Jeriden Villegas on Unsplash

Pagpag – In everyday use, pagpag means shaking off dust or dirt. Pagpag is also a Filipino term for a superstition saying one can never go directly to one’s home after attending a funeral unless they have done the pagpag.

Pagpag, however, has a more dire definition.

Among the marginalized caste of Philippine society, Pagpag is the Tagalog term for leftover food from restaurants (usually from fast food restaurants) scavenged from garbage sites and dumps, in some cases, ‘fresh’ pickings from the garbage bins right outside the restaurant. Pagpag food can also be expired frozen meat, fish, or vegetables discarded by supermarkets and scavenged in garbage trucks where this expired food is collected. Pagpag can be cooked in various ways, such as adobo or mechado or refried, as in refried chicken.

The video below was a short documentary on the story of ‘Pagpag.” Fair warning: The video is not for the faint of heart.

Credit: A short documentary on the story of Pagpag by Drew Binsky via YouTube

The story of pagpag is relevant to the debate on wages – a living wage – in the Philippine Congress. At least to some in Congress, there is a recognition the recently adjusted daily wage for the National Capital Region (NCR), the seat of government, to P410 daily is inadequate ($7.23 per day as of September 1, 2023 exchange rate of P56.68 – U.S. $1.00). Expectedly, those in the Philippine Chamber of Commerce and Industry argue that raising the daily minimum wage will be inflationary, a tired but tested economic truth.

Purchasing Power of the Peso (NCR) is down to P0.84 from 2018 to 2023, a decrease of 16%. The minimum wage was P537 in 2018. In 2023, the minimum wage is P610, an increase of 13.6%. Simple math tells us wages have not kept up with inflation. Often, statistics do not reflect reality. If you’ve visited the supermarket recently, you know this to be true.

Source: https://rssoncr.psa.gov.ph/article/summary-inflation-report-consumer-price-index-2018100-national-capital-region-june-2023

Even for commuters, the bite of inflation is evident. The minimum average jeepney fare is about P12, and a Light Rail Transit ride is between P14 and P35 each way. It is not uncommon to spend around P50-P100 per day on public transportation. That’s about 10%-15% of the minimum daily wage.

In a classic shell game, the government takes pride in saying all minimum wage earners are exempt from income taxes. This is true. However, a regressive Value Added Tax (VAT) is imposed on practically all sales of services and imports and the sale, barter, exchange, or lease of goods or properties (tangible or intangible). The tax is equivalent to a uniform rate of 12%, based on the gross selling price of goods or properties sold or gross receipts from the sale of services.

A person making minimum wage who purchases a toothbrush will pay the same VAT as the person who makes 10X the minimum wage, granted that the higher earner is subject to income taxes but is also granted the same exemption from taxes on the sum equivalent to the first P250,000.

To achieve some measure of parity or fairness, we need not be economists or math wizards. There are many ways. Although, in the words of Department of Finance Secretary Benjamin Diokno, “I am willing to tax the rich, but given the composition of the Philippine Congress, I would rather spend my time in more productive pursuits’, it remains possible if the good Secretary would at least try and let the Filipino people know whom among the members of Congress will refuse to ‘tax the rich.’ Perhaps the remaining discernment left in the Filipino electorate may come to bear in the next elections. By not even trying, Secretary Diokno has guaranteed that no such taxes will ever be imposed. Or was he thinking of himself?

According to the Commission on Audit (COA), Felipe Medalla, the former Bangko Sentral Governor, earned a total of P9.3 million for his basic salary as the BSP governor for six months and as a Monetary Board member for three months. He received P24,000 for his honorariums, P11.8 million for his allowances, another P11.8 million for bonuses, incentives, and benefits, and discretionary, extraordinary, and miscellaneous expenses (EME) amounting to over P1 million. Secretary of Finance Diokno, on the other hand, earned a total of P7.6 million for his basic salary as BSP governor under former President Rodrigo Duterte and as finance chief under President Marcos.

Former Bangko Sentral ng Pilipinas (BSP) Governor Medalla and Finance Secretary Diokno were among the highest-paid officials of the Marcos administration in 2022, according to COA.

State auditors published its annual report on salaries and allowances for the year on August 2. They showed Medalla and Diokno topping the list with salaries, allowances, and payments, respectively, totaling P34.1 million and P28.8 million.

Property taxes. While funding for education is partly derived from property taxes, it can be argued that property taxes in the Philippines remain low.

Compare the Philippines to other countries.

Source: https://www.unescap.org/sites/default/files/Day%201%20Session%203_Sissie%20Fung_Property%20Tax%20in%20Asia-Pacific.pdf

Property taxes can also be progressive. In 2023, a studio, meaning no bedroom, costs between P3M-P5M. Using P5M as a basis, all property taxes on the first P5M may be assessed at the current rates and progressively adjusted accordingly. Even a luxury tax is possible for properties above P50M, 10X the nominal price for a studio.

Vehicle registration. Vehicle registration fees can be further adjusted to the level of luxury.

Hospitality. The more luxury, the more tax.

Fuel. Index cost of diesel to cost of gasoline. Keep diesel prices low with a surcharge on non-diesel gasoline, including aviation fuel. Impose a registration surcharge on private-use diesel vehicles. Subsidize diesel, and, in effect, the cost of goods from shipping is mitigated. Fares for jeepneys, buses, and ferries can be similarly structured for tax, which may make free light rail transit rides possible.

Utility bills. Water and power rates can be similarly structured for subsidized minimum consumption rates and by consumer location, such as water and power connections; even the internet and cable can be adjusted accordingly for swanky exclusive addresses.

If only the courage to tax the rich can be mustered as part of social justice.

Revenue must, however, be protected from the usual scoundrels. The average Filipino is willing to pay tax so long as there are ironclad guarantees that taxes are redound to their welfare and benefit. Additional taxes require strengthening governance, transparency, and accountability. Of course, it’s easier said than done. But we must not stop advocating and vote accordingly, for these are our only weapons lest the people’s patience be tested one more time.


ABOUT THE AUTHOR: Dr. Crispin Fernandez advocates for overseas Filipinos, public health, transformative political change, and patriotic economics. He is also a community organizer, leader, and freelance writer.

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