Module 4 Lesson 3: Philippine Economic History PDF

Module 4 Lesson 3 Economic History Agrarian Reform and Taxation  Introduction Economic history deals with the study of past economic events by applying economic theory to historical situations and institutions. In Philippine economic history, we see the growth of the nat...

Module 4 Lesson 3 Economic History Agrarian Reform and Taxation  Introduction Economic history deals with the study of past economic events by applying economic theory to historical situations and institutions. In Philippine economic history, we see the growth of the nation; the story of how Filipinos were manipulated by colonizers who exploited the country’s national resources for their own colonialist and imperialist aims.  Studying economic history allows us to understand the economic decisions being made today, decisions that affect not just our lives, but also the lives of the rest of Filipino today and tomorrow. Three crucial economic issues Agrarian Reform Taxation Trade policies  Agrarian Reform Agrarian reform is a vital aspect of the Philippine economy because nearly half of the population is employed in the agricultural sector, and most citizens live in rural areas. Agrarian reform is centered on the relationship between production and the distribution of land among farmers.  Pre-Colonial Period type of land ownership- communal (commonly owned by the community) system of land cultivation- “kaingin” system or the slash and burn method. barter trade- agricultural products with luxury items  leasing and selling of lands-Maragtas Code (only recorded transaction of land sale) Code of Luwaran- Muslim record of the lease of cultivated lands; no record as to how this lease arrangement was practiced.  Spanish Era The Spaniards introduced the pueblo agriculture, where rural communities, were organized into pueblo and given land to cultivate. No indios owned the land; the King of Spain owned all the lands. Filipinos were assigned to develop these lands and paid their colonial tributes to the Spanish authorities in the form of agricultural products.  Pueblo Agriculture The native families were A system wherein merely landholders and native rural not landowners. By law, communities were the land assigned to organized into them was the property of pueblo and each the Spanish King where Christianized native they pay their colonial family is given four tributes to the Spanish (4) or five (5) authorities in the form of hectares of land to agricultural products they cultivate. produced.  The Law of the Indies Spanish crown awarded tracts of land to religious orders. Spanish military as repartimientos or reward for their service Bandala Spanish authorities required native Filipino farmers to sell their goods to the government.  The encomienda Miguel Lopez de Legazpi divided the archipelago into large parcels and assigned each parcel to a favored Spaniard for administration and care. From the encomienda system, the hacienda system developed. The Philippines became an exporter of raw materials and an importer of goods. In the 1860s, Spain enacted a law ordering landholders to register their lands Peasant families were driven out or forced to abandon their claim to those who had their lands titled Religious orders, the biggest landowners in the Philippines, also became a leading source of abuses and exploitation. By the end of the Philippine Revolution, the revolutionary government declared all large landed estates, especially friar lands, as confiscated and government property.  The American Period The Americans were aware that the leading cause of social unrest in the Philippines is landlessness Several land policies were introduced … distribute land ownership to a significant number of Filipino tenants and farmers.  The Philippine Organic Law of 1902 … provided regulations on the ownership of public lands 16 hectares for public individuals 1,024 hectares for corporate landholders  Act No. 496 or the Land Registration Act introduced the Torrens System November 6, 1902 Torrens title is a system of land registration and land transfer that relies on a state- maintained register of land holdings. Recorded as the owner of a property in the register is the absolute owner of that property. It is considered conclusive and uncontestable proof of ownership and cannot be altered.  The Cadastral Act or The Land Act No. 2259 speeds Registration Act of up the issuance of 1902 or Act No. 496 Torrens titles. This placed all private was done by and public lands surveying a under Torrens municipality and system. presented the result to the land registration court. Homestead Program (1903) It allowed a tenant to enter into agribusiness by acquiring a farm of at least 16 hectares. … unoccupied, unreserved, unappropriated agricultural public land in the Philippine Islands … no limit to the size of landholdings people could own Possession was limited to those who could afford to buy, register, and acquire fixed property titles. Not all friar lands acquired by the Americans were given to landless peasant farmers, as some lands were sold or leased to the Americans and Filipino business interests. Land reform program introduced by the Americans was implemented without support mechanisms thus forcing some farmers to return to tenancy, and wealthy Filipino hacienderos purchased or forcefully took over lands from farmers who could not afford to pay their debts. Peasant uprisings Colorum uprising Sakdal uprising  Commonwealth Government President Manuel L. Quezon laid down a social justice program focused on the purchase of haciendas, which were to be divided and sold to tenants Several agencies were created to protect and defend the farmers  President Manuel Roxas Republic Act No. 34 to establish a 70 – 30 sharing arrangement between tenant and landlord, respectively President Elpidio Quirino Land Settlement Development Corporation was established to accelerate and expand the resettlement program for peasants.  President Ramon Magsaysay National Resettlement and Rehabilitation Administration (NARRA) Accelerated the government’s resettlement program and distribution of agricultural lands to landless tenants and farmers. It also aims to convince the Huks to resettle in areas where they could restart their lives as peaceful citizens.  R.A. 1199 or the Agricultural Tenancy Act It protects the relationship between landholders and tenants, protecting the tenurial rights of tenants and enforced tenancy practices.  President Diosdado Macapagal Republic Act No. 3844 (Agricultural Land and Reform Act Abolished share tenancy in the Philippines and prescribed a program to convert tenant- farmers to lessees and later on owner- cultivators. no funding  President Ferdinand Marcos Presidential Decree (P.D.) No. 2 … placed the entire Philippines a land reform area P.D. No. 27 Emancipation of tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instruments and mechanism therefor This shall apply to all tenant farmers of private agricultural lands primarily devoted to rice and corn under a system of sharecrop or lease- tenancy. The tenant farmer … shall be deemed owner of a portion constituting a family-size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated. In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it.  “Masagana 99” self-sufficiency program Masagana 99 was a program that offered farmers a package intended to increase how much palay they can harvest from their land, which they would be able to afford through a credit program with rural banks, coordinated by the government.  President Corazon Aquino Republic Act No. 66 57 (The Comprehensive Agrarian Reform Program or CARP) Republic Act 6657, otherwise known as the Comprehensive Agrarian Reform Law, was signed on June 10, 1988 and took effect five days later.  Republic Act 6657 This law states that all public and private agricultural lands regardless of tenurial arrangements and commodity produced shall be subject to agrarian reform.  What is the retention limit for landowners? landowners is 5 hectares. However, 3 hectares shall be awarded to each child of the landowners who is at least 15 years old, actually tilling the land, or directly managing the land. 3 hectares for each landless tenant farmers  Evolution of Philippine Taxation Taxation is the lifeblood of the nation. Taxation is the process by which the sovereign, through its lawmaking body, raises income to defray the necessary expenses of the government.  Pre-Spanish Period people pay to the barangay contributions called “handog”, “buwis” or “alay” (offer). it is a customary practice in rendering involvement and support to the government. the chieftain’s family members were exempted from paying taxes. Non-payment of taxes was already punishable during this period (Santiago, Garcia, and David, 2017)  Spanish Time The Spaniards imposed tributes … to generate resources to finance the maintenance of the islands, such as salaries of government officials and expenses of the clergy. Exempted from payment of tributes Principales, alcaldes, gobernadores, cabeza de barangay, soldiers, members of the civil guard, government officials, and vagrants. In 1884, tribute was replaced by a poll tax collected through a certificate of identification called the cedula personal. Later on, half of Unlike the tribute, the tribute was cedulas were paid paid in cash and per person, not the rest with per family produce. Polo y sevicio or forced labor was also a character of taxation In public works and construction of services, while some served as night guards or other jobs at the municipio. falla may exempt from polo  American Period Real estate tax was levied on both urban and rural real estates (land tax) Tax evasion was prevalent, especially among the elites. The Internal Revenue Law of 1904 was passed During the term of the 2nd civil governor Luke E. Wright - Bureau of Internal Revenue (BIR) was created through the passage of Reorganization Act No. 1189 dated July 2, 1904. On August 1, 1904, the BIR was formally organized and made operational under the Secretary of Finance, Henry Ide (author of the Internal Revenue Law of 1904), with John S. Hord as the first Collector (Commissioner). The Underwood-Simmons Tariff Act (1913) was passed resulting in a reduction in the revenue as export taxes levied on sugar, tobacco, hemp, and copra were lifted. New taxes were introduced 1914 Income tax 1919 Inheritance tax  The Commonwealth 1937 cedula tax was abolished 1940 residence tax was imposed on every citizen aged 18 years old and above and on every corporation 1939 National Revenue Code  Corazon Aquino Value-Added Tax (VAT) Uniform rate of 10 percent on the sale of domestic and imported goods and services and zero percent on exports and foreign- currency-denominated sales It is an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services.  Expanded Value Added Tax (E- VAT) was introduced during the administration of Gloria Macapagal-Arroyo (2005). This law expanded the VAT base, subjecting to VAT energy products such as coal and petroleum products and electricity generation, transmission, and distribution.  Pres. Fidel V. Ramos It was during Commissioner Liwayway Vinzons- Chato's term that a five-year Tax Computerization Project (TCP) was undertaken in 1994. This involved the establishment of a modern and computerized Integrated Tax System and Internal Administration System. Pres. Benigno “Pinoy” Aquino III Republic Act 10351, or the Sin Tax Reform Law. It is primarily a health measure with revenue implications. Pres. Benigno “Pinoy” Aquino III The Sin Tax Law helps finance the Universal Health Care program of the government, simplified the current excise tax system on alcohol and tobacco products and fixed long standing structural weaknesses, and addresses public health issues relating to alcohol and tobacco consumption.  Pres. Rodrigo Roa-Duterte Tax Reform for Acceleration and Inclusion (TRAIN) Act was passed in December 2017. Its prominent feature was lower income taxes; annual incomes not exceeding 250,000 pesos are tax-exempt.  Trade Policies and the Philippine Economy Galleon Trade (Manila-Acapulco Trade) was institutionalized by the Spaniards from 1565 to 1815. … brought porcelain, silk, ivory, spices, and myriad other exotic goods from China to Mexico in exchange for New World silver. Manila became the point where these two interests met By the 19th century, the focus of trade was export agriculture, as the cash crop economy brought economic development Abaca, sugar, and tobacco became the three major cash crop exports of Philippines as Manila was gradually opened to international trade in the late 1840s and early 1850s. Payne-Aldrich Tariff Act (1909)  allowed free entry of Philippine goods in the United States subject to the tariff, while U.S. imports were exempted from tariffs in the Philippines influx of U.S. manufactured goods in the Philippines retarded the growth of Philippine industries.  Philippine Trade Act of 1946 (Bell Trade Act) The law effectively tied the Philippine economy to the United States, as it sets quotas of Philippine exports, pegged the Philippine peso to the U.S. dollar at a rate of 2:1, and provided free trade between two countries for eight years. The act included a controversial parity clause. It granted U.S. citizens equal economic rights with Filipinos, such as the right to exploit natural resources. The payment of war reparations amounting to 620 million dollars was tied to the acceptance of this clause. In 1955, the Laurel-Langley Agreement was signed amending the Bell Trade Act of 1946 and made it more favorable to Filipino interests.  This Act abolished the U.S. authority over the exchange rate of the peso, made parity privileges reciprocal, extended the sugar quota, and extended the time period for the reduction of other quotas and for the progressive application of tariffs on Philippine goods exported to the United States.  Ferdinand E. Marcos “This Nation Can Be Great Again” In the 1970s, the Philippine economy grew at a higher average annual rate of 6.4 percent, mainly because Marcos borrowed foreign currency. The Philippines was plunged in debt, from 2.3 billion to 24.4 billion dollars in 1983.  In the 1980s, the economy was negatively affected by the declining world market for Philippine exports, problems with borrowing in the international capital market, and domestic financial scandal. It was then apparent that Marcos had run the economy to the ground as he and his family siphoned government funds to their personal accounts.  From 1965 to 1986, it was estimated that the Marcos family stole a total of five to 10 billion dollars. The country’s growth rate in 1984 and 1985 was negative: -9.27 percent and – 6.94 percent, respectively President Corazon “Cory” Aquino Trade Liberalization Policy signed the Philippines into the Association of Southeast Asian Nations (ASEAN) Free Trade Agreement (AFTA) in 1992, a trade and tariff commitment to the international community of Southeast Asian member states.  Pres. Fidel Valdez-Ramos The country cemented Philippine tariff and trade commitments in international law through participation in international trade agreements such as the World Trade Organization (WTO), the AFTA, and the Asia Pacific Economic Cooperation (APEC). The momentum of trade liberalization under Ramos shielded the nation from the disastrous 1997 Asian Financial Crisis. The World Trade Organization (WTO) created in 1995 is an international institution that oversees the rules for global trade among nations. It superseded the 1947 General Agreement on Tariffs and Trade (GATT) created in the wake of World War II. The main function of the organization is to help producers of goods and services, as well as exporters and importers, protect and manage their businesses.  APEC, or the Asia Pacific Economic Cooperation, was established in 1989 (Australia was a founding member) by 12 economies (including the Philippines) and became a non- binding and voluntary forum where trade, investment and economic cooperation issues are discussed. Since its establishment, APEC now has 21 member-economies. Pres. Gloria Macapagal - Arroyo The Philippines started to attract Business Process Outsourcing (BPO) companies Remittances from overseas Filipino workers soared  Japan-Philippines Economic Partnership Agreement (JPEPA)  allows Japan to choose any site in the country to dump its hazardous wastes.  Pres. Rodrigo Duterte  inflation soared in 2019  marred by is poor human rights record due to its “war on drugs” Duterte’s pivot to China has also been criticized as the government seemed unwilling to assert Philippine sovereignty in the West Philippine Sea.  The Philippine Offshore Gaming Operators (POGO) increased, which employed and catered mainly to the Chinese. Amid the worldwide pandemic caused by the COVID 19 during the presidency of Duterte, the future of the Philippines especially its trade and economy remains very uncertain. Thank you!