ATTY. GILBERTO LAUENGCO, J.D. OBLIQUE OBSERVATION

“Instead of taking the pants off the taxpayer, it might be better to take the vest off the vested interests”

-- Mark Twain

Last Monday, Albay 2nd District Rep. Joey Salceda filed a bill which can be argued as another “tax the rich more measure”. House Bill 6993 “seeks to increase the tax rate of non-essential goods to 25 percent. At present, Section 150 of the National Internal Revenue Code imposes on jewelry, perfumes and yachts a 20 percent tax rate based on wholesale price or the value of importation. The bill not only seeks to increase the rate but, expand the list of so- called non- essential or luxury goods. This tax will be on top of all other taxes.

The bill seeks to add several items to the so- said list such as:

-- wristwatches, bags, wallets and belts worth more than PHP50,000; -- sale of real property worth more than PHP100,000 per square meter; -- beverages above PHP20,000; -- paintings above

PHP1 million sold by those other than the artist; -- antiques worth more than PHP100,000; -- automobiles, brand new or second hand, worth more than PHP10 million.

Essentially, since these items are beyond the reach of the majority of Filipinos, this bill clearly wants to increase the taxes on our more affluent or wealthy citizens.

This is actually a milder version of a bill filed in 2021 by the Makabayan bloc which proposed a wealth tax for people with taxable assets worth over PHP1 billion. This bill proposed that people with over PHP1 billion in assets should be required to pay 1 percent of the total amount in additional taxes while those with over PHP2 billion pay 2 percent and those with PHP3 billion, 3 percent.

The authors of the bill said that “the tax would help shift the burden away from regressive tax measures such as consumption taxes toward the handful of the wealthiest who are capable of contributing more to our public coffers. A regressive tax leaders illustrate that former rebels turned politicians often face significant challenges in transitioning from a revolutionary movement to leading the government, including the need to balance competing interests, manage a complex political landscape, and uphold the principles that drove the revolution in the first place.

Moreover, some may apply the principle of “weather-weather lang yan” which means leadership in the government is just seasonal. Before it was the time of the traditional politicians, then the Moro National Liberation Front (MNLF), and now the Moro Islamic Liberation Front (MILF). Thus some of them may be corrupted by the internal cultural dynamics that the institution has been deeply embedded with. Therefore, we can see that there are several factors that revolutionary groups may become corrupt when they hold power.

The following are red flags that we need to see if they are present in the current regional government in the Bangsamoro. The principle that “power corrupts, absolute power corrupts absolutely” may be present if there can no longer be checks and balances. This means that holding power can bring temptations and lead to abuse of power and corruption.

In terms of decommissioning of combatants, we also need to look at the system in place. If proper systems of transparency, proper monitoring, and evaluation are not in place then this may lead to lack of accountability. Thus, revolutionary groups may lack established systems of checks and balances to hold leaders accountable in programs and activities that are spent from the taxes collected from the people.

There may also be instances when those who lead the revolution may have broken idealism, which means that the ideals and values that drove the revolution may be forgotten or disregarded as leaders focus on maintaining power.

And lastly, when the system of conflict and violence became a cycle, the problems now become systemic. Corruption may be deeply ingrained in the political and economic systems, making it difficult to eradicate.

As a former member of the Bangsamoro Transition Authority, I know how hard it is to work in the Bangsamoro Autonomous Region in Muslim Mindanao where there are several matters and concerns that are urgent and need to be addressed properly. But if those mentioned are not properly addressed by the Government of the Day with the help of all stakeholders, then we need to ask ourselves, “what are we transitioning for?”

If you ask me, we should move forward in transitioning to set proper institutions that will put in place the rule of law and justice mechanisms. Oftentimes justice is very much neglected by peacebuilders. Most people in the government think that you have to forgive the various violent actors because that is the only way to agree to peace if they know they will not be put in prison or tried and face the consequences of their previous acts.

We need to have a strong national government that will be able to deal with the violations of human rights, and criminal acts (such as graft and corruption). Otherwise we will never solve the problem. (MindaViews is the opinion section of MindaNews. Mussolini Sinsuat Lidasan is Executive Director of the Al Qalam Institute of the Ateneo de Davao University. He was a member of the Bangsamoro Transition Commission from 2017 to 2019, Member of Parliament of the Bangsamoro Transition Authority from 2019 to 2022) scheme like the VAT is one that is usually applied uniformly and thus takes a larger percentage of income from the low-income earners rather than the high-income earners. Progressive taxes take a larger percentage from high income earners.

Many analysts believe that an actual straight wealth tax or a pure progressive tax would be better than a higher tax rate on luxury goods. A wealth tax, they say, would generate more revenues for the government and it would be more equitable.

Progressive factions in the country have been increasingly vocal lately on the call for a wealth tax. For these factions, a wealth tax is a potent tool for equality and justice. These factions call attention to the widening gap between the rich and poor and the need for a more equitable tax system.

Wealth taxes and straight progressive taxes seems to be a popular way to generate more funds and alleviate the suffering of the poorer sectors of society. A business ana- lyst once opined that wealth taxes

“allow the engine of capitalism to roar and then have the winners compensate the losers. By taking care of those who lose out in the capitalist system, the winner ensures that the losers won’t want destroy the system completely.”

Unfortunately, no nation has successfully managed to get enough money out of progressive taxation to properly fund a system of social programs. Even so-called progressive European nations fund social programs such as medical care for everyone and welfare fund the same by making everyone pay a portion of their income not just the rich. Their tax programs feel like insurance rather than wealth redistribution.

Opponents of wealth or pure progressive taxes point out that most wealthy people are the ones with the talent and ability to take the lead in business development in a country. They are the trailblazers and the driving force that create new businesses that in turn create more jobs. Higher taxes targeted specifically at these people will be a disincentive for them to stay in the country. They will just go and find other countries with lower taxes and set up businesses there.

Also, countries with higher progressive tax rates are actually a deterrent for investment. Let’s face it, investors invest to make money and keep as much as it that they reasonably can. Less investors means less jobs.

Higher taxes on non-essential items often just alter spending habits. It does not guarantee higher revenues.

Clearly, higher taxes for the wealthy may not be the magic bullet that some of its proponents claim it to be.

This is my oblique observation.

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Presidential Communications Office.