Disjoint
Disjoint
Posted 00:09am (Mla time) Feb 12, 2005
Inquirer News Service
Editor's Note: Published on page A14 of the February 12, 2005 issue of the Philippine Daily Inquirer
DONALD Dee, president of the Philippine Chamber of Commerce and Industry (PCCI), has said: "Imposing new taxes can cause short-term pains for business and consumers alike. However, its long-term effects will be beneficial in ensuring sustainable and continuous growth of the economy." Together with other groups, the PCCI supports raising the value-added tax rate from the current 10 percent to 12 percent.
But isn't there a disjoint here? Raising taxes, cutting down costs, and all the revenue measures of the government are meant to address the fiscal deficit, are they not? But now the government and other groups are pushing VAT increases and other measures as a means for apparently uplifting the plight of the poor. Here comes the confusion: Government lacks money because of debts and lackluster collections, not to mention an addiction to spending lavishly. The result is to reduce the resources available for health, education and other social services. The answer, according to the government, is... well, we're back to square one, the revenue raising measures.
The disjoint we're pointing out is between a need to raise taxes to ensure the survival of the government, and the supposed other, many benefits of the fiscal measures. Obviously a government in a healthier fiscal state is in a better position to offer basic services. But there remains a crucial difference between raising taxes because of an emergency need, and raising taxes because it's part of a long-term economic policy.
So which is it? The confusion among the administration's allies is evident as is their unwillingness to bite the bullet, so to speak. Now after passing a few of the administration-sponsored revenue measures, some lawmakers are already demanding that they be served their pound of pork pronto.
But can anyone blame them? Even President Gloria Macapagal-Arroyo seems to have forgotten that it was the huge government debt (which stood at P3.8 trillion as of November last year) that lent urgency to the enactment of new revenue measures. Earlier this month, she declared that the additional taxes could be used to put up businesses and improve the quality of education. And she hardly talks anymore about the need to narrow the deficit or cut the country's debts, except when international credit rating agencies threaten a credit downgrade.
Which is hardly surprising, considering that after raising the alarm about a looming debt crisis, she rather very quickly announced that it was over as if such things happen with the wave of a magic wand. The impression it gave was that the Arroyo administration was either very capricious or extremely clueless in handling the economy.
The administration may be basking at present on some encouraging economic news. If it has some proven bad habits, one of the biggest is taking credit even for events that may be accidental-or not really of the government's doing.
The hope of the poor lies in responsible, visionary governance. The kind that does not panic, but soberly addresses the problems at hand. We want to see more methodical attitudes toward problem solving, and a more analytical approach to the genuine challenges that face the economy.
So let's clear the air and get it from the horse's mouth: What are the fiscal measures really for? Are they meant to address a potential fiscal crisis, or not? The answers set the parameter for the level of debate that follows. If the taxes are for long-term objectives, then they can be debated at greater length; if they are to stave off a looming crisis, what, then, is that crisis exactly? And what is called for, and within what time frame?
Posted 00:09am (Mla time) Feb 12, 2005
Inquirer News Service
Editor's Note: Published on page A14 of the February 12, 2005 issue of the Philippine Daily Inquirer
DONALD Dee, president of the Philippine Chamber of Commerce and Industry (PCCI), has said: "Imposing new taxes can cause short-term pains for business and consumers alike. However, its long-term effects will be beneficial in ensuring sustainable and continuous growth of the economy." Together with other groups, the PCCI supports raising the value-added tax rate from the current 10 percent to 12 percent.
But isn't there a disjoint here? Raising taxes, cutting down costs, and all the revenue measures of the government are meant to address the fiscal deficit, are they not? But now the government and other groups are pushing VAT increases and other measures as a means for apparently uplifting the plight of the poor. Here comes the confusion: Government lacks money because of debts and lackluster collections, not to mention an addiction to spending lavishly. The result is to reduce the resources available for health, education and other social services. The answer, according to the government, is... well, we're back to square one, the revenue raising measures.
The disjoint we're pointing out is between a need to raise taxes to ensure the survival of the government, and the supposed other, many benefits of the fiscal measures. Obviously a government in a healthier fiscal state is in a better position to offer basic services. But there remains a crucial difference between raising taxes because of an emergency need, and raising taxes because it's part of a long-term economic policy.
So which is it? The confusion among the administration's allies is evident as is their unwillingness to bite the bullet, so to speak. Now after passing a few of the administration-sponsored revenue measures, some lawmakers are already demanding that they be served their pound of pork pronto.
But can anyone blame them? Even President Gloria Macapagal-Arroyo seems to have forgotten that it was the huge government debt (which stood at P3.8 trillion as of November last year) that lent urgency to the enactment of new revenue measures. Earlier this month, she declared that the additional taxes could be used to put up businesses and improve the quality of education. And she hardly talks anymore about the need to narrow the deficit or cut the country's debts, except when international credit rating agencies threaten a credit downgrade.
Which is hardly surprising, considering that after raising the alarm about a looming debt crisis, she rather very quickly announced that it was over as if such things happen with the wave of a magic wand. The impression it gave was that the Arroyo administration was either very capricious or extremely clueless in handling the economy.
The administration may be basking at present on some encouraging economic news. If it has some proven bad habits, one of the biggest is taking credit even for events that may be accidental-or not really of the government's doing.
The hope of the poor lies in responsible, visionary governance. The kind that does not panic, but soberly addresses the problems at hand. We want to see more methodical attitudes toward problem solving, and a more analytical approach to the genuine challenges that face the economy.
So let's clear the air and get it from the horse's mouth: What are the fiscal measures really for? Are they meant to address a potential fiscal crisis, or not? The answers set the parameter for the level of debate that follows. If the taxes are for long-term objectives, then they can be debated at greater length; if they are to stave off a looming crisis, what, then, is that crisis exactly? And what is called for, and within what time frame?
posted by Dante at 12:09 AM
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