Tax reforms, the senators and their teachers
Ido my two (2) cents worth of effort in the Senate deliberations on tax reforms. The senators raise good questions and valid issues. I am truly delighted that the senators are supported by my students and former colleagues. One of them is Jojo Villapando, Chief of Staff of Senator Sotto, and my student in public finance. I have become a victim of my pontificating that public finance should be used to promote social justice. I have always challenged my students to do their best to help the poor. We have expressed extreme sadness with the lopsided income distribution in the country where families in the richest group earn 10 times more than the poorest families. A constant challenge which I give is for students to use their positions of responsibilities to give the poor better opportunities to improve their lives.
Jojo did not disappoint and suggested to his principal to express reservations on the reduction of the estate tax from 20% to 6%. He must share my belief and that of Thomas Pikkety that a wealth tax can help minimize intergenerational transfer of wealth. The tax can make the next generation rich to be less wealthy so that more funds can be spent to finance public services for the poor. The fly in the ointment is that the estate tax is so inefficiently administered that it cannot prove its worth.
Jojo suggested other questions. Senator Sotto asked why government should reduce the tax rate on the cheapest vehicles which congest the streets. Jojo must have reminded him that excise taxation is not an instrument for progressivity. It should be designed to curb consumption of goods which cause undue harm.
I could not help but smile when I heard Senator Sotto ask whether it would be better for government to lower the VAT rate from 12% to 10% and give up all the exemptions. The answer is yes on all counts – it would be more efficient, equitable, and revenue-productive. But Prof. R. Bird reminds us that tax reforms are not just products of pure intentions. They are influenced by various interests of stakeholders including their political survival.
Jojo is certainly worth the highest grade of 4.0 in his class. He made me very proud. This is the greatest reward of a teacher – to see his/her students to become better persons, use their knowledge to help make the world a little better, less poorer, and more just. The crowning glory of teacher is to witness how her students have become better than she is.
As I write this column, more questions are raised by the members of the Senate. Senator Bam Aquino dissects the revenues that will be raised by the tax program. How much will be used for the R8.4-trillion "Build, Build, Build" program and how will the balance be financed? How will the self-employed be helped when an 8% tax on gross receipts is much higher than their current tax burden? I thought of Senator Bam’s teachers. They must be truly proud of how he has stepped up to his responsibilities as senator of the land.
It is my first time to listen to Senator Win Gatchalian participate in the deliberations in the Senate floor. And he does not disappoint. He has been transformed from a mayor to a legislator who takes his job so seriously to the detriment of his health. I listened with pride as how he pointed out how a tax on sweetened beverages that is based on volume instead of on sugar content can be distortionary, inequitable, and unhealthy. His teachers must be proud of him, too.
And lastly, I watch Senator Angara bear all the pressures of being chair of the Ways and Means with grace and answer all the questions calmly and intelligently despite our inability to help him well. He has opened the discussions to all sectors and conducted public hearings religiously with an open mind. His is a very difficult job – balancing the competing interests and come up with a program that will give more revenues but at the same time make the tax system more just and efficient. His teachers must beam with pride.
And so we remember all their teachers and ALL OUR TEACHERS who have opened our minds and touched our hearts. We have become better because they have helped make us so. My teacher – my hero! mguevara@synergeia.org.ph