THE 2016 general elections are just 10 months away. It is
natural that people are discussing who should lead this country of 103 million
people by that time. And more often than not, political and economic ideologies
determine, whether explicitly or implicitly, people’s criteria in choosing and
supporting their candidate/s.
The Philippines has a personality-oriented politics, not
philosophy- or ideology-oriented. This is also true of other countries, to be
sure. Political parties have come and gone, and others are moribund, depending
on whether the key party figure remains visible and influential. Either way,
candidates are easily swayed by the populist aspirations and welfarist demands
of many voters.
During the two-party system that dominated Philippine
politics until the Marcos dictatorship beginning in the 1970s, an ideological
line, in hindsight, was supposed to distinguish the Nacionalista Party (NP) and
the breakaway Liberal Party (LP). The Nacionalistas were supposed to be
nationalists and trade protectionists, more state-oriented; and the Liberals
were supposed to be globalists and free traders, more market-oriented. Yet both
parties were ruled by the same elite, and the line that was supposed to
distinguish them was blurred further by turncoatism. Two Liberals among the roster
of presidents in the postwar Third Republic ran under the rival banner of the
Nacionalistas and went on to uphold the supposed ideology of the Liberals. And
then as now, as the presidency had always demonstrated, Philippine politics was
and remains personality-driven.
Post-Marcos politics gave way to the multiparty system in
effect until today, with other parties, other advocacies, giving voice to past
attempts in the two-party system to present an alternative politics. Yet all
these parties must accord with the practicalities of political survival by
forming coalitions -- including the ruling coalition led by the LP and
including its odd ally, the NP.
The foremost consideration for survival is the pulse of
the electorate, and thus the mentality and behavior of politicians may
generally be deemed a reflection of the mentality and behavior of the voters,
as influenced further by the mainstream media and various advocacy groups. If
voters think politicians are opportunistic and corrupt, politicians too -- without
articulating it, of course -- think voters are just as opportunistic and
corrupt. Many politicians feel there is high pressure from the voters for an
entitlement and welfarist set of policies. These voters and pressure groups
(including non-voters like those below 18 years old) feel that they are
entitled to be given free healthcare, free education, free or highly-subsidized
housing, credit, tractors, burial, etc.
It is always easy and populist to blame politicians who,
in turn, take advantage of populism and the entitlement mentality by supporting
high and multiple taxes, or pushing for a further increase in those taxes, so
they will have additional revenues to fund various types of subsidies,
including corporate welfare for crony firms.
Such political populism and welfarism coupled with
corruption are costly to the taxpayers. While the politicians and governments
of other countries, our neighboring countries, in particular, have their own
brand of populism, their taxes are not as high as those in the Philippines.
In the 10 countries who make up the ASEAN, for instance,
the Philippines has the highest corporate income tax rate, the highest
withholding tax for resident aliens, and the highest VAT. It has the second
highest personal income tax rate in the region.
Notice that Vietnam is rather aggressive in cutting its
tax rates, coupled with liberalizing their economy to more investors, local and
multinational. That is a good formula to broaden the tax base and possibly
realize even bigger tax revenues.
If Philippine politicians and presidentiables cannot
escape following political populism, then this should be complemented by tax
realism -- people and businesses dislike high and multiple taxes, so the tax
base becomes narrow, the temptation/incidence of tax avoidance rises, and
overall tax collection becomes smaller than its potential.
Consider also that after almost one-third of people’s
monthly incomes has been taken by the government, there are other mandatory and
forced contributions to government-owned social security agencies (SSS, GSIS,
PhilHealth, Pag-IBIG, etc.). And from the take-home pay (net of personal income
tax and mandatory contributions), government further collects many other taxes
and fees -- VAT for almost everything on consumer items, vehicle registration
tax for cars, franchise tax for businesses, real-property tax, etc.
And that is one criticism of the ruling LP, that it is
not acting liberal enough. Many of its adopted and implemented policies are far
from liberal and closer to the populist and welfarist philosophy, while
eschewing tax realism too.
Another example that the LP diverges from (classical)
liberal philosophy of more freedom for the citizens and limited government is
the proposed Cavite-Laguna Expressway (CALAX) -- about which Dr. Raul Fabella
noted in an article that “the bid parameter should have been the lowest toll
charge rather than highest premium payment to the government.”
Thus, future CALAX users should pay lower toll fees (more
savings in their pockets) and not pay more because of the higher payment to the
current government.
Tax competition among ASEAN member-countries is happening
and winners, very often, are those who offer low tax rates and carry out tax
regulations that are easy to remember and manage.
Presidentiables and political parties should consider
campaigning and advocating for drastic cuts in both corporate and personal
income tax, withholding tax, VAT, and other types of taxes.
Bienvenido S.
Oplas, Jr. is the head of Minimal Government Thinkers, a Manila-based think
tank that advocates classical liberal ideas, and a fellow of the South East
Asia Network for Development (SEANET), a regional center that advocates economic
freedom in the region.
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See also:
BWorld 5, Transportation Bureaucracy and Uber, June 16, 2015
BWorld 6, Biotechnology, Innovation and the Philippines, June 19, 2015
BWorld 8, Manila's Traffic and Transport Woes, June 27, 215
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