BWorld 144, Individual liberty vs state coercion and taxation

* This is my article in BusinessWorld on July 18, 2017.

“I hope we once again have reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: as government expands, liberty contracts.”

-- Ronald Reagan, former US President

Perhaps the first intellectual in China and the world who championed individual liberty was Lao Tzu (600 BC). He was born more than 2,000 years before Adam Smith wrote and called for a “simple system of natural liberty.” Here, Lao Tzu wrote referring to government:

The more restrictions and limitations there are, the more impoverished men will be...

The more rules and precepts are enforced, the more bandits and crooks will be produced. Hence, we have the words of the wise (the sage or ruler):

Through my non-action, men are spontaneously transformed.

Through my quiescence, men spontaneously become tranquil.

Through my noninterference, men spontaneously increase their wealth.

The “restrictions and limitations” that Lao Tzu mentioned are now what we call regulations, permits, licenses and taxes. The “bandits and crooks” that he mentioned are now the various officials and bureaucrats in government, elected or appointed. While the “noninterference” that he mentioned refers to a minimal and limited government that intervenes and taxes the least.

And talking about taxes, especially Dutertenomics’ TRAIN, the numbers below should be a good reminder that it is largely a train for more government coercion and interventions.

A short definition of these concepts: (a) Total taxes (TT) are the sum of corporate income tax + labor taxes + other taxes; (b) Total tax rate (TTR) = TT/private enterprises’ net and taxable income, in percent (see table).

Total tax rates in East Asia, % of commercial profits

Source: Price Waterhouse Coopers (PWC), Paying Taxes  annual reports 2009, 2012, 2015, 2017.

Based on these numbers, we both have good and bad news.

The good news is that the Philippines has a declining TTR, from almost 51% in the 2009 PWC report to nearly 43% in the 2017 report. Other economies with declining TTR are Brunei, Singapore, Laos, Indonesia, Myanmar, Taiwan and Japan. Only Malaysia has a deteriorating or rising TTR.

The bad news is that the Philippines has the highest TTR in the 10-country ASEAN, higher than socialist Vietnam, also higher than developed Hong Kong, South Korea, and Taiwan. Only welfarist Japan and socialist China have TTRs higher than the Philippines.

These are the more controversial aspects of Dutertenomics’ TRAIN -- (a) hike in excise tax for oil products and new cars, (b) introduction of additional tax on sugar-sweetened beverages, and (c) expansion of VAT coverage to more sectors including business process outsourcing (BPO).

To help dispel the ugly label of “Philippines having the highest TTR in the ASEAN and other East Asian economies,” tax proposals (a) and (b) should have been abandoned, and 12% VAT (highest in the ASEAN) should be reduced to only 6%, probably even 8% and cover more sectors including BPO. The main reason why many sectors lobbied for exemption from VAT is because 12% is high.

To help fund Dutertenomics’ build-build-build plan without those new taxes and tax hikes, the government should cut spending on some agencies and bureaucracies whose welfarist goals and mandates overlap with other agencies. Then rechannel the savings to more infrastructure spending. But this is now wishful thinking as the TRAIN is on a fast track of legislative wreckage.

The issue of more state coercion and taxation will be tackled in the inaugural “Philippine Students for Liberty Conference” this coming July 21-22, 2017 at the Hive Hotel in Quezon City. The event sponsor is the Students for Liberty Philippines (SFL-PH) and the theme will be “live freely, live fully.”

SFL-PH President Joseph T. Bautista has invited me to be one of the speakers on Day 2 of the event and I gladly accepted the honor. SFL CEO Wolf von Laer will give the keynote address. Other speakers will be Thomas Laughlin, CEO of Amagi; Luis Sia, president of UpStart; Shahab Shabibi, CEO of World by Machine Ventures; Mahar Mangahas, president of Social Weather Stations (SWS); Imantaka Nugraha of SFL-Indonesia, and Markus Löning of Friedrich Naumann Foundation for Freedom (FNF).

I will talk about state coercion and legislations in the energy sector, infrastructure, and fiscal policies during the SFL conference.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers and a SEANET Fellow. Both are members of Economic Freedom Network (EFN) Asia.

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See also:
BWorld 141, Reducing system loss, Part 2, June 30, 2017 
BWorld 142, PPP vs ODA, Part 3, August 08, 2017 
BWorld 143, Coal power and economic development, August 09, 2017

The Students for Liberty - Philippines (SFL PH)

Last October 20, 2016, the Students for Liberty - Philippines (SFL PH) launched their facebook and twitter pages. Congrats guys.

I am happy that the liberty movement among the Philippine youth is taking shape formally. And when we say liberty, it is individual liberty, not national or class or clan liberty.

From Joseph Bautista, President of SFL PH, October 20:

We're pro-peace, pro-individual, pro-market, and pro-liberty.. We're part of the bigger Students For Liberty network around the world. We have students from the USA, Indonesia, Canada, Europe, New Zealand, Australia, Africa, and many others.

Here in the Philippines, we also have a growing local network, initially consisting of students from Ateneo de Manila University, the University of the Philippines, and San Beda College.

Interested in joining? Feel free to message me if you belong in any one of the universities, and I'll happily redirect you to the respective Campus Coordinator to get you started right away. If your university is not yet on our network, please do not hesitate to contact me. We'll help you start one there.

Posted by some SFL PH members:

From Jonathan Michael Vegamora, Public Relations Officer of UP Libertad:

I'm a libertarian because I believe individuals have the right to live their own lives as they see fit as long as it does not encroach on the freedoms of others to do so. This political philosophy has guided me for a long time and I want to keep it that way, especially in a time when many people in the Philippines and all over world believe more in the capacity of government to act for the greater good than their own selves.

In the face of what's happening at home and overseas - state-sponsored violence (and if you ask me for examples, I'll give you a dump truck load of 'em from US interventionism to Saudi airstrikes on Yemenis to AFP forces shooting up Lumad communities) - we need those basic classical liberal rights that have made our lives peaceful and prosperous more than ever.

From Emil Apostol, another member of UP Libertad and supporter of SFL-PH:

Because I believe freedom is the virtue by which all other virtues can be exemplified, I fight for it. Smaller government, fewer taxes, and the freedom to live my life the way I see fit without anyone forcing me to do otherwise; sounds great, if I do say so myself. :) 

Last May, UP Libertad held its first, inaugural and open house forum, I was one of two speakers, I talked about Friedrich Hayek. See the 22-slides presentation here.

UP Libertad will partner with Pan Xenia fraternity in organizing a forum on Foreign Trade Issues. Initially scheduled this coming November 09, it will be rescheduled for early next year. I will be one of several speakers and I will talk about the challenge of unilateral trade liberalization in the ASEAN, both tariff and non-tariff in goods, also in services.