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Life and taxes

“We should not let these people cut our life line to a better and more prosperous future.”

 

It has often been said that taxes and death are the only two things certain in life. Quite true. Most countries, developed, emerging or otherwise, and even individuals have ignored this truism to their utter dismay and ruin.

In the United States, for example, President Donald Trump is vigorously campaigning for his candidates in the mid-term elections armed with statistics showing how his much vaunted tax reform program has energized the economy resulting in more jobs, more money in the pockets of ordinary Americans and increased investments for the future.

Buoyed by a more realistic tax regime, a good number of the biggest US companies which parked their profits and excess cash hoards overseas since the Obama administration have now been lured back home. And what reformation was done? Well, the corporate and personal income taxes were lowered to more reasonable levels. The leakages (yes, leakages as in the incentives and perks being given by multiple agencies to various industries and sectors) within the tax system were plugged and the sales tax on a number of items was increased. Even the incentives under the ObamaCare plan was scrutinized and leveled off. Government fat was cut off even more and in its place a number of simplified and self-regulating processes. It is expected that in time, with more jobs and economic activities across the board but more interestingly among small and medium scale enterprises, revenue generation will increase and become more predictable. As hoped for. Which is why Mr. Trump is suddenly riding a mini-crest of approval which may translate into the Republicans holding on to Congress unless he stumbles into another faux pas as in his ‘cha cha’ like steps on the Khasoggi disappearance while at the Saudi Arabian consulate in Istanbul.

In any event, tax reform has become the centerpiece of government action across the board in a bid to attract investments, create more jobs and have more revenues to support a menu of social services. As what’s going on in Japan right now. For years, through a string of administrations in the world’s third-largest economy, resistance to reformation has become de rigueur. Successful blocking efforts specially by such politically powerful sectors as senior citizens (the golden generation) and farmers groups, among others,have stymied any such initiatives.

But mounting budgetary deficits, driven mainly by the growing needs of an aging population for more social services, have forced the Abe government to cave in. A week or so ago they finally decided to raise the sales (consumption) tax from 8 percent to 10 percent by 2019. How this proposed increase will play out remains to be seen. But Prime Minister Abe had no other choice. As pundits observed, raising the tax is “crucial to finance snow balling social security expenditures—specially medical fees —in the rapidly aging  society.”

Indeed, while raising taxes will always be contentious, there is no better way for growth and development  as well as providing social services to the workforce, whether retired or in place. Which is why tax reform has become a must under this administration. We have overcome objections over the TRAIN 2 package and a number of other concerns. There has, in fact, been a mini-bonanza of sorts as more and more people of age get extra money in their pockets. Life, in a very real sense, has somewhat become more bearable if not hopeful.  But that is not enough. More has to be done if we hope to level up as a nation —from being a spectator and analyst of things.

The problem is while we are all struggling  to make both ends meet and benefiting from the TRAIN 1 package, there has lately been an effort on the part of some sectors and their allies in the Senate to stymie the passage of TRAIN 2—the twin of the earlier legislation. Sadly, these critics and their fellow travelers have politicized the reform effort seemingly without regard for the drawbacks of such an undertaking. It appears these guys are so tied up with those benefiting from the multi-billion tax leakages drawn from the bogus locators at PEZA. These guys have taken advantage of the loopholes in the present PEZA Law to the point they would rather let the country suffer than give up their undeserved privileges. Leave out benefits for senior citizens and other vulnerable sectors, for example. No less than Budget Secretary Ben Diokno has said that for now, we would be losing P41 billion annually if we just hold the increase in the fuel excise tax. We should not let our seniors and other vulnerable groups wobble as we grapple with the new situation of higher crude costs and the like. We should not let that happen.

Nor should we let these people stomp all over us and leave the ambitious Build Build Build infrastructure program unfunded as will be the case if we do not pass TRAIN 2. That will draw us back years as we struggle to keep out only our competitiveness as an investment destination. That will make those milking the treasury no end happy as the rest of us suffer and cry. We should not let these people cut our life line to a better and more prosperous future. Never.

Topics: Jonathan Dela Cruz , Life and taxes , United States , President Donald Trump , TRAIN , PEZA
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