Taxing the crisis
Taxing the crisis
Updated 01:27am (Mla time) Sept 17, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the September 17, 2004 issue of the Philippine Daily Inquirer
THE POLARIZING positions on new taxes do not augur well for the swift resolution of the fiscal crisis. The more Malacañang insists on new taxes, the more Congress becomes adamant in resisting them. The hardening on both sides may indicate the initial dramatics that usually characterizes any tax debate. Or it may show that either side has no appreciation of the rut the Philippines is in.
Whichever, the stalemate is bad for the country. There seems to be a tendency, particularly on the part of Congress, to put up stumbling blocks to any executive measure to contain the fiscal contagion by tax reform and new tax measures. While there is basis for lawmakers' calls for plugging the tax loopholes and checking the worsening indebtedness of government-owned and -controlled corporations (GOCCs), the same lawmakers are notoriously issuing blanket rejection of the most minimum tax measures coming from the executive. Sen. Joker Arroyo, for one, has used hyperbole and alarmist warnings to oppose any and all new tax measures. He has said that the new taxes may bring about President Macapagal-Arroyo's downfall.
It is true that public opinion is against new taxes. A recent survey showed that 78 percent of the population is vehemently against new taxes. But lest our lawmakers use the survey results as approbation of their legislative wisdom, they should be reminded that no survey would ever show that the public pulse is for taxes. If, as the proverbial wisdom says, that the only certain things in life are taxes and death, then a similar public survey on death would also yield the same result as the survey on new taxes. Nobody wants either.
Taxes--and death--are therefore inevitable. But one can deal with these negative realities positively--that is, with grace and dignity. Surely, Congress and the executive should come together to solve the fiscal crisis. And any approach would have to do the following things: plug the tax loophole, stop the bleeding of GOCCs and streamline the bureaucracy, reduce or abolish lawmakers' discretionary funds (pork barrel) and enact new tax measures. For Congress to insist that the executive undertake the first two things before they act on the third and the fourth is wishful thinking. The four initiatives should be calibrated and coordinated.
In the first place, there's no rational basis for Congress to reject offhand the tax measures proposed by the executive. Increasing the excise taxes on tobacco and liquor is only practical because both are sin products whose consumption must be regulated. In the same way, widening the value-added tax to cover lucrative professions is only practical. Strictly speaking, widening the VAT coverage is not a new tax measure; it's merely improving on a tax measure and plugging the loophole.
There are other tax measures that Congress may consider. It may increase the motor vehicle registration fee and even increase the specific tax on petroleum. The latter may come later when world petroleum prices have stabilized, but it is a wise measure if only to control the environmental effects of fossil fuels. Increasing vehicle registration fees can be immediately implemented if only to regulate the car market as well as check the environmental impact of cars.
Other tax measures that are well thought out and practical should likewise be considered. It would also help if Congress firms up its political will on giving up entirely the pork barrel of its members. That will immediately save the government P20 billion that will otherwise go to useless projects as well as line the pockets of many corrupt lawmakers.
As for the off-budget liabilities of government, particularly the servicing of the debts of GOCCs, the executive must resolve to cut costs. It must begin by cutting the salaries of executives of GOCCs whether they are making profits or reporting losses.
Now Congress may say the executive should bite the bullet first before it cuts its pork barrel and pass new tax measures. This is a condition that does not hold water because whatever it says, Congress is a strong part of the fiscal problem. If it continues to hem and haw on new tax measures, it should at least cut its pork barrel so that the savings could go to government operations and programs. Congress should realize it's on the same boat as the rest of the nation, and the boat is sinking partly because of its own inaction.
Updated 01:27am (Mla time) Sept 17, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the September 17, 2004 issue of the Philippine Daily Inquirer
THE POLARIZING positions on new taxes do not augur well for the swift resolution of the fiscal crisis. The more Malacañang insists on new taxes, the more Congress becomes adamant in resisting them. The hardening on both sides may indicate the initial dramatics that usually characterizes any tax debate. Or it may show that either side has no appreciation of the rut the Philippines is in.
Whichever, the stalemate is bad for the country. There seems to be a tendency, particularly on the part of Congress, to put up stumbling blocks to any executive measure to contain the fiscal contagion by tax reform and new tax measures. While there is basis for lawmakers' calls for plugging the tax loopholes and checking the worsening indebtedness of government-owned and -controlled corporations (GOCCs), the same lawmakers are notoriously issuing blanket rejection of the most minimum tax measures coming from the executive. Sen. Joker Arroyo, for one, has used hyperbole and alarmist warnings to oppose any and all new tax measures. He has said that the new taxes may bring about President Macapagal-Arroyo's downfall.
It is true that public opinion is against new taxes. A recent survey showed that 78 percent of the population is vehemently against new taxes. But lest our lawmakers use the survey results as approbation of their legislative wisdom, they should be reminded that no survey would ever show that the public pulse is for taxes. If, as the proverbial wisdom says, that the only certain things in life are taxes and death, then a similar public survey on death would also yield the same result as the survey on new taxes. Nobody wants either.
Taxes--and death--are therefore inevitable. But one can deal with these negative realities positively--that is, with grace and dignity. Surely, Congress and the executive should come together to solve the fiscal crisis. And any approach would have to do the following things: plug the tax loophole, stop the bleeding of GOCCs and streamline the bureaucracy, reduce or abolish lawmakers' discretionary funds (pork barrel) and enact new tax measures. For Congress to insist that the executive undertake the first two things before they act on the third and the fourth is wishful thinking. The four initiatives should be calibrated and coordinated.
In the first place, there's no rational basis for Congress to reject offhand the tax measures proposed by the executive. Increasing the excise taxes on tobacco and liquor is only practical because both are sin products whose consumption must be regulated. In the same way, widening the value-added tax to cover lucrative professions is only practical. Strictly speaking, widening the VAT coverage is not a new tax measure; it's merely improving on a tax measure and plugging the loophole.
There are other tax measures that Congress may consider. It may increase the motor vehicle registration fee and even increase the specific tax on petroleum. The latter may come later when world petroleum prices have stabilized, but it is a wise measure if only to control the environmental effects of fossil fuels. Increasing vehicle registration fees can be immediately implemented if only to regulate the car market as well as check the environmental impact of cars.
Other tax measures that are well thought out and practical should likewise be considered. It would also help if Congress firms up its political will on giving up entirely the pork barrel of its members. That will immediately save the government P20 billion that will otherwise go to useless projects as well as line the pockets of many corrupt lawmakers.
As for the off-budget liabilities of government, particularly the servicing of the debts of GOCCs, the executive must resolve to cut costs. It must begin by cutting the salaries of executives of GOCCs whether they are making profits or reporting losses.
Now Congress may say the executive should bite the bullet first before it cuts its pork barrel and pass new tax measures. This is a condition that does not hold water because whatever it says, Congress is a strong part of the fiscal problem. If it continues to hem and haw on new tax measures, it should at least cut its pork barrel so that the savings could go to government operations and programs. Congress should realize it's on the same boat as the rest of the nation, and the boat is sinking partly because of its own inaction.
posted by Dante at 11:56 PM
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