Let’s talk basketball

WHILE we are focused on the effort of government troops to end the siege on Marawi by the Islamic State (IS)-loving Maute group, Congress has been preparing to lower the boom on what can be a worrisome measure, the tax reform bill. Government economic managers have been painting a good picture for the country once the measure is passed by lawmakers.

But don’t be fooled. Any tax measure has only one purpose, which is to increase government revenues. While the administration of President Rodrigo Duterte has been telling us that the proposed tax reform bill will straighten out the crooked aspects of the current tax laws, it is also not hiding the fact that it is designed to increase revenues to fund its “build, build, build” economic thrust which is essentially an “infrastructure storm.”

This means that the tax impositions would increase overall even if some of these, like the income tax, would be lowered. When lawmakers deliberated on the tax reforms proposed by the executive branch, they were forced to come up with a watered-down measure because of worries of the backlash. And even that watered-down tax packages still contained other worrisome provisions.

Late last month, the House of Representatives passed its version of the watered-down tax reform bill although the Senate seems more careful by taking time to pass a similar measure. The bill as expected sought to cut the personal income tax rate, expand the value-added tax (VAT)-base, raise excise taxes on fuel and automobiles and impose taxes on sugar-sweetened beverages.

The lower income taxes is good, but will the increase in the take-home pay of workers be able to weather the rise in the cost of goods and services? While the measure was passed unanimously by the House because of the presence of the pro-Duterte supermajority there, it was also opposed especially by the Makabayan bloc, which described it as anti-poor.

What would be the effect, for example of the excise tax on fuel products? It may look like imposing an excise tax of say, P3 per liter, on diesel starting January next year (if the measure is passed by Congress and signed by the president this year) would only affect people who own motorized vehicles. But the truth is it would also hit, say, public transportation and the movement of goods and agricultural products. It’s a no-brainer that the poor will also be affected.

The imposition of taxes on sugarsweetened products (another proposal is to tax salted products) supposedly for health reasons also needs to be looked into in detail because it would ultimately hit not only the producers but also the sellers. Of course, I am not an economic manager, that is probably why I am worried about the effects of all these.

The House has actually been true to form, speeding up the passage of the tax reform measure in keeping with the plea by the executive branch. But I think measures like this need deeper deliberation, one that includes the public in it. The Senate seems to be more analytical and is attentive to public opinion, but will it be independent enough to be conscious of the effect of the tax reform measure on the lives of ordinary folk and cushion its negative impact?