I never like writing about politics in my blog because politics are messy and I skip reading them in the newspaper for about 2 – 3 years already. This is because the stories are the same with little imaginative variation. It usually revolves around the “pie” and their relative share of it. You see politicians are just like spoiled brats that never grew up. They always complain that they never got enough share of the pie, i.e., that their share of the pie is small and insufficient for their gluttonous appetite even though it is big enough to feed a hungry family. And the one who wields the knife, i.e., the one in power always manages to get the largest slice. Expectedly, the ones who got the “small” slice complain about inequity and they go on ranting about it even to the extent of throwing tantrums. After some time and several barb trading, the knife welder would “give in” by providing the supposedly “injured” party with an “extra” slice of the pie though the combined slice isn’t as big as their slice just to stuff their mouth full and mute their complaint. But here is the catch; the extra slice didn’t come from the knife welder’s share. Rather, it came from the share of someone they knew would be angry but wouldn’t complain at all, the general populace. And after several partitions, the people eventually end up with crumbs! To add insult to injury, the politicians expect us to thank them for the crunchy and yummy crumbs! It is for this reason that I always deemed politics not only a waste of my valuable time since it doesn’t add to my knowledge but also a waste of my valuable computer memory because hard disks space is more valuable than writing about their trash talks. In addition to that, blogging about politics require me to spend extra sum of money to soothe my boiling indignation as well, e.g., I had to treat myself to a festive meal or watch a feel good movie. However, sometimes, it’s hard to ignore politics especially when it concerns both business and the economy. Take today’s headline for example. I woke up to discover that the high court has just lifted the restraining order on the implementation of the controversial E-VAT law and the government plans to implement them this November 1. Among the salient provisions of the E-VAT law was the removal of exemptions from a number of previously exempted transactions like electric power, gasoline, some processed foods, healthcare services, and other services. The income tax would also be increased from the present 32% to 35%. Furthermore, the law empowered the President to increase the rate by 2% next year in order to “improve” the fiscal situation, which all the more add burden to an over burdened populace. The intent of the law is to remedy the fiscal deficit of the government through increasing the revenue it could collect. Analysts especially foreign analysts from such institutions like the IMF, World Bank, Morgan Stanley, Citibank, and others would always painfully pointed out the “dismal” tax effort of the government, which stood at around 16% of GDP. It should be higher considering the fact that the tax rate is 32% plus VAT equivalent of 2% and other taxes. The conclusion, government should improve its tax collection effort and it still has some elbowroom to increase its tax rate. Really, who they think they’re kidding? It’s easy for them to say that because they’re not actually living here and hence, they’re not paying for their stupid advice! Besides, they stand to gain from the increase revenues because they would get paid for the loans they extended to the government. Don’t get me wrong; I’m not advocating that we renege on our debt obligation rather I deplore their prescription on solving the fiscal crisis. It’s not the inadequate tax take that is the problem but the system, the system of dependence on government “doling” as a means of enrichment and livelihood. Corruption is just one of the obvious form of that dependence on government to make money. Other forms include an entrenched, bloated and inefficient bureaucracy, unnecessary subsidies to buy political support from certain sectors of the society, wasteful spending like pork barrel funds, huge budget funding for “studies” and consultancy and the likes. On top of that, throw in economic mismanagement to the equation and there you have it, a ballooning budget deficit. Declining tax take is not the cause of the problem but the “symptom” of a failed system that is collapsing under its own weight and pressure from the environment. If I may allude to a historical precedent to prove my point here, one of the causes of the fall of the mighty Roman Empire is in its heavy exaction on the general population in the form of high taxes and often unscrupulous and “inventive” methods in the collection of taxes. The Roman Empire came to this situation because of its burdensome bureaucracy and military, its wasteful spending, and its ruinous economic policy, which were aggravated by endemic corruption. The effects of this abusive exaction was to trigger peasant revolts all throughout the empire but as the coercive power of the state were bought to bear against the dissidents, the Romans simply “evaded” paying taxes. Townspeople, barely surviving on their meager subsistent agriculture chose to give up their lands and freedom and offer themselves to the protection of a powerful magnate, which are usually government officials and senators since the latter’s households are exempted from paying taxes. These “colonus” or people of a “colonia” (Roman town) would work in the “Latifunda” (the equivalent of the modern day Hacienda) of these elites for a share of the crops. They are actually better off this way because they don’t have to pay the ruinous taxes at all but still they only earn subsistent wages, i.e., enough only to feed themselves. These colonus become the forerunner of the serfs in the European Middle Ages and the Latifunda become the precursor of the fiefs in the Feudal Age. As a result, monetary economy collapses, as less people were able to buy goods. Barter trading was revived. Economic inequalities became more pronounced and poverty becomes widespread. Taxes again fall short of expectation and chronic budget deficit appears. And what the Roman government did? They impose more taxes and inflict heavier penalty for failure to pay taxes, which all the more drive away the small remaining free farmers into the fold of the elites. Then, the barbarians came, and Rome couldn’t do anything about it because it is short of men and money. There are instances wherein the people actually welcome the invaders as long as these conquerors forgive their debt and lift their burden. The result, Rome fell and the Dark Ages sets in. Sounds familiar? Of course, history is repeating itself except that the Philippines is no Rome. It never was. Increasing government exactions only drives the economy underground further crippling the government’s tax effort, which invariably force government to raise more taxes and the cycle goes on until it couldn’t continue anymore and something happens. On the microscopic scale, both employers and laborers would seek means to “survive” and if the present labor situation is a gauge, things are set to get worse. Again, these are symptoms not the disease. Of all the economic classes affected by this latest crisis, the middle is the unhappiest of the lot. For unlike the poor (the ones living below the poverty line) who couldn’t pay anything at all even in better times, the crisis wouldn’t drastically change their status. Furthermore, the poor are the “pampered” class because of their number, which the politicians wasted no time in courting their votes by offering them subsidies and other forms of “bread and circus” as the Romans would call it when they surrendered their freedom in exchange for the imperial yoke. Rich, on the other hand, though affected would always manage to “get away with it”. The middle class however, is the ones over burdened with taxes and inept leadership. They are being pauperized and they stood to lose their status become noveau poor. The reaction? They immigrated not only to seek better opportunities but to escape hunger much like the Irish did when they leave their famine struck British ruled homeland in the 19th century and going to America or like what the Sicilians did in order to escape poverty and went to American or like what the Chinese did during the first half of the 20th century, escaping from the civil war. Again, this is a symptom of a decaying system and not the cause. Clearly, something has to be done to arrest the decline but RAISING TAXES is not one of them! Failure to address the systemic failure would lead to a situation where John Locke would describe as a man driven up to the wall and being denied of all his right, has no recourse but to exercise his one and only undeniable right, the right to rebellion. I hope that we don’t have to reach that point.
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