New taxes easier than stopping contraband
While certainly explosive, the P6.4-billion shabu shipment scandal at the Bureau of Customs is just the latest in an agency that, as far as I can remember, has been notorious as one of the most corrupt in the bureaucracy. This one, which implicates Davao City vice mayor and presidential son Paolo Duterte, has once again exposed just how deeply the corruption goes in government, how entrenched its patrons are, and how strategic its impact is on a nationwide level.
The scandal also puts the spotlight once again on the BoC, one of the government’s primary revenue generators and which, if managed efficiently, could well provide the billions of pesos needed to finance this administration’s ambitious infrastructure program.
Instead, the government has set its sights, quite stubbornly, on the speedy passage of new taxes that many experts agree will unduly burden the poor. This initiative, the administration’s economic managers argue, comes with updating the country’s taxation scheme, including the lowering of income taxes for some segments of the economy.
This is well and good. However, there is a deafening silence, a disturbing disinterest, in plugging the leaks in taxation, a notorious system of inefficiency that the latest BoC scandal only underscored. An truthful insight that Senator Chiz Escudero has recently articulated.
“It’s an easy way out. Instead of collecting taxes properly, instead of increasing efficiency, let’s just impose higher taxes,” he said, adding that the targets for both the BoC and the Bureau of Internal Revenue are way below target.
As the so-called tax reform bill now awaits approval at the Senate, Escudero also called out the deceiving characterization of the tax on sweetened beverages, such as soda, 3-in-1 coffee, and energy drinks, as a health measure. It’s about generating revenues, he insisted, the source of which will not be the rich because “lahat ng matamis at lahat ng maalat [ay wala] sa mamahaling grocery.”
Already owners of small sari-sari stores and carinderias, including the Philippine Association of Stores and Carinderia Owners, have expressed vehement opposition to a bill that, based on the proposed bill, will jack up the prices of soda, instant coffee, and powdered juice and therefore reduce consumption and drastically affect their sources of income.
They foresee near-doubling of prices, like the P5 instant coffee sachet that will go up to P8 and the P9 packet of orange juice that will go up to P20. The proposed excise tax on oil products would have the same effect on the prices of basic commodities, increasing the risk of inflation. In such scenario, the additional savings from the lowered income tax is in effect nullified.
This puts to doubt the avowed objectives of the tax reform package’s much hyped thrust toward social justice, a pillar of the Duterte presidency and one of his campaign promises. Worse, some of these salient provisions have even led some quarters to describe the package as anti-poor.
This need not be the case. According to recent polls, President Duterte continues to enjoy record-breaking support among many Filipinos. He is therefore in an ideal position to steer the government’s awesome powers toward a more productive direction. For instance, he could launch a crackdown on illegal smuggling, which for the longest time had deprived Filipinos of billions of dollars in unpaid import taxes.
It is worth noting that no president has succeeded in making a dent on this matter. The multi-billion BoC scandal thus brings to fore some interesting questions. How will President Duterte and his strong anti-corruption stance deal with a scandal that might implicate his son? Why does his anger about the shipment seem to be disproportionate compared to his typical outburst at the mere mention of illegal drugs?
Finally, will this scandal pave the way to what might be a more productive crusade against smuggling? If so, it will be very interesting how this will play out considering that a substantial bulk of contraband comes from China.