Why we are where we are
“In an ever-changing, incomprehensible world the masses had reached the point where they would, at the same time, believe everything and nothing, think that everything was possible and that nothing was true. ... Mass propaganda discovered that its audience was ready at all times to believe the worst, no matter how absurd, and did not particularly object to being deceived because it held every statement to be a lie anyhow. The totalitarian mass leaders based their propaganda on the correct psychological assumption that, under such conditions, one could make people believe the most fantastic statements one day, and trust that if the next day they were given irrefutable proof of their falsehood, they would take refuge in cynicism; instead of deserting the leaders who had lied to them, they would protest that they had known all along that the statement was a lie and would admire the leaders for their superior tactical cleverness,” wrote Hannah Arendt in her book, The Origins of Totalitarianism.
My generation ( Boomers) entered the world at the advent of what is now called the modern era, a period of great optimism and enthusiasm. The flourishing of new knowledge made possible by a more liberal atmosphere and the rise of science globally gave rise to innovative, more efficient technologies in most fields of human endeavor. There was hardly any problem then that people felt they could not solve given the prodigious growth and increasingly effective applications of science and technology.
As a boy growing up in the ’50s and ’60s my Tatay bought me books that spoke of the promise of nuclear power for the good of mankind. Nuclear technology would produce cheap electrical power and help in the cure of diseases like cancer. There was the “green revolution,” a time that saw agricultural productivity worldwide increased dramatically as a result of advances in agricultural technology.
The so-called modern world featured social, political, economic, scientific and religious institutions that promised to solve all of humanity’s problems and give us utopia or near utopia. Many of us believed the promise though we also recognized that there were far too many unknowns — want we now call “black swan events” — that had not been factored into the equations.
And “black swans” did appear.
Barring the use of the atom in weapons of war, accidents in nuclear power plants have wreaked havoc on people and the ecology. No one anticipated second and third order undesirable effects of the chemicals we used to enhance production in agriculture, animal husbandry, and fisheries. The very chemicals that allowed us to enhance food flavors, textures, and shelf life among others also proved difficult for our bodies to adapt and increased the incidence of certain diseases. Medicines designed to improve the quality of life produced physical aberration in infants and even death.
The Duterte administration has taken a bold step in prioritizing to reform our two-decade-old tax system on its first year (not 100 days). Under the leadership of Finance Secretary Carlos Dominguez, the Department of Finance (DoF) proposed a comprehensive tax reform package to make our tax system simpler, fairer and more efficient.
One year after submitting package one of the tax reform bill called Tax Reform for Acceleration and Inclusion ( TRAIN) to Congress, the Senate will now deliberate on their proposed version (SB 1592) which introduced amendments in the House version (HB 5636), to wit:
a. On personal income tax, exemption was lowered from P250,000 (HB 5636) to P150,000 but allowing additional exemption of P25,000 each up to 4 dependents. It also retained the maximum rate at 32% for those earning P2 million and above, which is lower than the House version’s ultra- rich rate at 35% for those earning P5 million and above;
b. On sugar tax, the Senate proposed a two-phased approach lowering the P10 per liter to P5 per liter for those with caloric sweeteners, P3 per liter for those with non-caloric sweeteners and P10/ liter for those with highfructose corn syrup in the first two years, and P0.05 per gram of sugar per drink in the succeeding years. SB 1592 also exempted milk products and 3-in-1 coffee;
c. On fuel tax, the Senate version lowered the proposed excise tax on petroleum from P3 per liter to 1.75 per liter in the first year and adopted a P1 per liter during the first 3 years for LPG;
d. On automobile tax, the Senate adopted the same 5-tier regime but still lower than the original proposal of DoF to impose a 200% excise tax for luxury cars (above P2.1 million net manufacturer’s price or importer’s selling price);
e. On value-added tax ( VAT), the Senate retained the same VAT exemptions on raw food, health care, social housing, BPOs, senior citizens, PWDs, cooperatives and increased the VAT threshold from P1.5 million to P3 million.
To increase or decrease tax rates is a tax policy reform, but whether this will be collected correctly and on time is a matter of tax administration. The inefficiency of our tax system resulted in high tax rates, high compliance costs, and low compliance from a very narrow taxpayer base, especially from self-employed and professionals (SEPs).
The comprehensive tax reform must not disregard the fact that our tax administration, i.e., Bureau of Internal Revenue (BIR) and Bureau of Customs ( BoC), needs an overhaul as well starting with exempting their personnel from salary standardization, implementing the Attrition Law, appropriating budget to automate and professionalize tax as-