Welfarism 23: Letter to Sens. Cayetano and Pangilinan on Solo Parents Welfare

This is my letter to two Senators which I faxed to their respective offices late afternoon today.
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23 October 2012

Hon. Pia S. Cayetano

Chairperson

Committee on Youth, Women and Family Relations

Hon. Francis N. Pangilinan

Chairperson

Committee on Social Justice, Welfare and Rural Development

Senate of the Philippines

Pasay City

Dear Senators Cayetano and Pangilinan,

While the State has the obligation to protect the citizens’ right to life, private property and liberty, it may have no right to force and coerce private enterprises to give mandatory discounts to their consumers if these companies are already paying the required taxes and complying with various health and regulatory requirements.

The provisions of two Senate Bills amending RA 8972 or the “Solo Parents Welfare Act of 2000” seem to go along this practice. To give additional benefits to solo parents, SB No. 2563 by Sen. Manny Villar provides these mandatory discounts:

(A) TWENTY (20%) PERCENT DISCOUNT ON ALL PURCHASES OF MILK OR FORMULA PRODUCTS AS WELL AS DIAPERS AND OTHER NECESSARY INFANT ITEMS;

(B) TWENTY (20%) PERCENT DISCOUNT ON INFANT MEDICINES AND SUPPLEMENTS. INFANT SHALL REFER TO CHILDREN AGED 0- TO 4 YEARS.

And SB No. 1439 by Sen. Loren Legarda provides the following additional benefits to solo parents:

(1) TEN PERCENT (10%) DISCOUNT FROM ALL PURCHASES OF CLOTHING AND CLOTHING MATERIALS FOR THE CHILD MADE WITHIN A PERIOD OF UP TO TWO (2) YEARS FROM THE CHILD'S BIRTH;

(2) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES OF BABY'S MILK, FOOD AND FOOD SUPPLEMENTS MADE WITHIN A PERIOD OF TWO (2) YEARS FROM THE CHILD'S BIRTH;

(3) FIFTEEN PERCENT (15%) DISCOUNT FROM ALL PURCHASES OF MEDICINES AND OTHER MEDICAL SUPPLEMENTS/SUPPLIES FOR THE CHILD MADE WITHIN A PERIOD OF FIVE (5) YEARS FROM THE CHILD'S BIRTH; AND

There are serious flaws in these two bills forcing companies to give mandatory discounts. Among them:

1. They assume that all solo parents in the country are poor or financially distressed and hence, the need to give them mandatory discounts for their young children’s needs. This is not true.  Some solo parents are rich themselves or have rich family members who can give them various  assistance in cash or in kind.

2. They assume that all shops, manufacturers and traders that produce or sell these goods are rich or financially stable and hence, can afford to give such discounts without adversely affecting their financial conditions. Again this is not true. While some companies are financially stable, others are not or may even be in the brink of bankruptcy due to various financial, economic and social challenges here and abroad.

3. They assume that even financially unstable shops, manufacturers and importers of these products will continue selling these goods. This is wrong. One  result of the implementation of RA 9994 or the “Expanded Senior Citizens Act of 2010” where senior citizens are given mandatory discount of 20 percent plus 12 percent VAT free or 32 percent effective discount on medicines, not tax creditable, is that small drugstores that cannot afford to keep selling medicines at a loss have stopped selling essential medicines to senior citizens. Those living in small and rural municipalities have to travel to bigger cities that are far away so they can buy at Mercury or other large chain pharmacies.

This proves once again that Newton’s third law of motion, “For every action, there is an equal opposite reaction”, can also apply in economics. This can be aptly restated as “For every government intervention to force welfare, there is an equal opposite reaction that results in diswelfare.”

Sen. Legarda’s bill has one consolation, it provides that:

COMPANIES OR BUSINESSES FROM WHOM DISCOUNTED PURCHASES ARE MADE AS PER THE IMMEDIATELY FOREGOING SECTION SHALL BE ENTITLED TO CLAIM THE SAID DISCOUNTS AS PART OF THEIR BUSINESS EXPENSE, PROVIDED THAT, THEY MAINTAIN DETAILED AND SEPARATE RECORDS OF SAID PURCHASES."

While this may look good, there could be some technicalities involved that will prevent the affected enterprises from claiming such deductions early enough. 

Based on the above considerations, it would appear that these two Senate Bills are unnecessary and hence, they should not be entertained by the Committees where they are referred to.

There are alternatives to help poor parents, solo or not. These include the conditional cash transfer (CCT), the universal healthcare (UHC), and related  programs for the poor by the government. Under the CCT or 4Ps program, the government is giving money to poor parents so they can buy essential items for their families. Under the UHC, the Department of Health and some rich local governments shoulder the annual PhilHealth contribution of poor households. So that not only babies and toddlers, but even adult members of the family like the parents and grandparents are covered by government healthcare.

Hoping that you will consider the above points.

Thank you very much.

Sincerely yours,

Bienvenido “Nonoy” Oplas, Jr.

President

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See also

Welfarism 19: Consumption-led Growth and Direct Welfare, March 31, 2012
Welfarism 20: Hollande and Socialism in France, May 07, 2012
Welfarism 21: Is Malaysia a Welfare State? July 18, 2012
Welfarism 22: CCT, 4Ps and Central Planning, October 14, 2012

Drug Price Control 27: Letter to Sen. Pia Cayetano, May 15, 2012
Drug Price Control 28: On Cong. Biron and Sen. Villar Bills, July 14, 2012
Drug Price Control 29: MRP Attempt Over Anti-Leptospirosis Drug, August 16, 2012

Drug Price Control 30: Reversing the Policy on AC Resolution in 2009, September 14, 2012