Beyond the Minimum
Beyond the minimum
Updated 11:07pm (Mla time) Sept 05, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the September 6, 2004 issue of the Philippine Daily Inquirer.
AS columnist Belinda Olivares-Cunanan pointed out the other day, businessman Lance Gokongwei's position on the role of business in helping solve the fiscal crisis is the sensible one. "I rather subscribe to the argument of Lance Gokongwei, president of conglomerate JG Summit Corp., who opined that more than the symbolic gesture of donating cash, what is more important is for big businesses to pay their taxes correctly," Cunanan wrote.
At the minimum, Gokongwei is surely right. Paying the right amount of taxes is the least that business firms can do. But is it enough?
There are many, and here we must include numerous businessmen, who think that the fiscal crisis can be solved if only the government gets its act together: that is to say, if new taxes are imposed, if tax collection is improved, if tax evaders are prosecuted, if unnecessary spending is curtailed, if the pork barrel is reduced. In this school of thought, the problem lies with the government precisely because it is a fiscal (not a financial or an economic) crisis. By the same token, the solution lies with the government too, including the use of its resources to force or to encourage companies to pay their taxes correctly.
But there is another school of thought. Many people have begun to think that, for the fiscal crisis to be resolved, extraordinary initiatives must be undertaken: donations to the so-called Bayanihan Fund, the setting aside of a few pesos' worth of text messages a day, energy conservation and other self-imposed austerity measures. In this line of thinking, the fiscal crisis is not simply the problem of the government's. By the same standard, the solution does not lie in the government's hands alone.
It is quite possible that the first approach to the problem would yield the right solution. The President's use of the word "crisis" to describe the government's deteriorating fiscal condition is based more on a political rather than a technical reading of the problem. Using a stricter definition, credit-rating agencies have declined to describe the government's situation as a crisis. In their view, the problem exists, but it has not reached crisis proportions.
But if the first school of thought has the right idea, the central part of the solution remains the imposition of new taxes. The government has proposed eight new tax measures; at least one needs to be passed within the year to convince its creditors and the same credit-rating agencies that what needs to be done is being done.
But it is precisely these new tax proposals that have met the most resistance, not only from the public but even from the administration's own senators. Sen. Ralph Recto, using the powerful metaphor of a leaking faucet to describe the government's fiscal state, proposes that the reduction in the pork barrel is substantial enough to eliminate the need for any new taxes. And Sen. Joker Arroyo believes Malacanang has not adequately explained why the budget deficit has widened dramatically in the first three years of the Arroyo administration.
(Senator Arroyo's opposition has been unusually intemperate, even by the maverick senator's usual standards. He has called Palace and budget officials "tax terrorists," and he insists-in a sort of a Philippine version of Zeno's paradox-that President Macapagal-Arroyo must first accept the blame for the fiscal crisis before she can solve it.)
It is precisely because of this resistance that the second approach to the fiscal crisis seems more and more necessary. There is real value in the amount of money that a Bayanihan Fund can accumulate; there are real savings from individual efforts to conserve energy. But the true significance of the second approach lies in its participatory nature.
Getting the public to accept new taxes, or higher, market-determined electricity rates, is difficult enough when the old questions about corruption or tax avoidance or government waste continue to nag us. But if the rich are brought out of their comfort zone to donate a million here and there, if the middle class buys into the concept of "text donations" (as the jewelry-donating Silliman alumni now propose), if more and more people accept the inconveniences of austerity, then maybe public resistance to the new taxes may soften.
The second approach makes the first doable.
Updated 11:07pm (Mla time) Sept 05, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the September 6, 2004 issue of the Philippine Daily Inquirer.
AS columnist Belinda Olivares-Cunanan pointed out the other day, businessman Lance Gokongwei's position on the role of business in helping solve the fiscal crisis is the sensible one. "I rather subscribe to the argument of Lance Gokongwei, president of conglomerate JG Summit Corp., who opined that more than the symbolic gesture of donating cash, what is more important is for big businesses to pay their taxes correctly," Cunanan wrote.
At the minimum, Gokongwei is surely right. Paying the right amount of taxes is the least that business firms can do. But is it enough?
There are many, and here we must include numerous businessmen, who think that the fiscal crisis can be solved if only the government gets its act together: that is to say, if new taxes are imposed, if tax collection is improved, if tax evaders are prosecuted, if unnecessary spending is curtailed, if the pork barrel is reduced. In this school of thought, the problem lies with the government precisely because it is a fiscal (not a financial or an economic) crisis. By the same token, the solution lies with the government too, including the use of its resources to force or to encourage companies to pay their taxes correctly.
But there is another school of thought. Many people have begun to think that, for the fiscal crisis to be resolved, extraordinary initiatives must be undertaken: donations to the so-called Bayanihan Fund, the setting aside of a few pesos' worth of text messages a day, energy conservation and other self-imposed austerity measures. In this line of thinking, the fiscal crisis is not simply the problem of the government's. By the same standard, the solution does not lie in the government's hands alone.
It is quite possible that the first approach to the problem would yield the right solution. The President's use of the word "crisis" to describe the government's deteriorating fiscal condition is based more on a political rather than a technical reading of the problem. Using a stricter definition, credit-rating agencies have declined to describe the government's situation as a crisis. In their view, the problem exists, but it has not reached crisis proportions.
But if the first school of thought has the right idea, the central part of the solution remains the imposition of new taxes. The government has proposed eight new tax measures; at least one needs to be passed within the year to convince its creditors and the same credit-rating agencies that what needs to be done is being done.
But it is precisely these new tax proposals that have met the most resistance, not only from the public but even from the administration's own senators. Sen. Ralph Recto, using the powerful metaphor of a leaking faucet to describe the government's fiscal state, proposes that the reduction in the pork barrel is substantial enough to eliminate the need for any new taxes. And Sen. Joker Arroyo believes Malacanang has not adequately explained why the budget deficit has widened dramatically in the first three years of the Arroyo administration.
(Senator Arroyo's opposition has been unusually intemperate, even by the maverick senator's usual standards. He has called Palace and budget officials "tax terrorists," and he insists-in a sort of a Philippine version of Zeno's paradox-that President Macapagal-Arroyo must first accept the blame for the fiscal crisis before she can solve it.)
It is precisely because of this resistance that the second approach to the fiscal crisis seems more and more necessary. There is real value in the amount of money that a Bayanihan Fund can accumulate; there are real savings from individual efforts to conserve energy. But the true significance of the second approach lies in its participatory nature.
Getting the public to accept new taxes, or higher, market-determined electricity rates, is difficult enough when the old questions about corruption or tax avoidance or government waste continue to nag us. But if the rich are brought out of their comfort zone to donate a million here and there, if the middle class buys into the concept of "text donations" (as the jewelry-donating Silliman alumni now propose), if more and more people accept the inconveniences of austerity, then maybe public resistance to the new taxes may soften.
The second approach makes the first doable.
posted by Dante at 11:05 AM
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