Steering A Nation

Published in Cebu Gold Star Daily

If a man does not know what port he is steering for, no wind is favorable to him.  

-- SENECA

Individual behavior is a result of the series and combinations of rewards and punishments a person receives throughout his or her life. In the most extreme, those who commit criminal acts are placed behind bars or fined while those who accomplish great things are rewarded by fame and fortune. In the center is a wide expanse of gray area of where minor behavioral nuances can no longer be micromanaged. Nonetheless, they can be generally steered by policy and law.


Taxation is the system of reward and punishment that leads the general populace to move towards certain behaviors while avoiding others. It is a process of soft obliteration, where undesired actions less than criminal are quelled. Imposing high taxes on certain industries like mining or logging can protect the ecology by some measure. Lowering taxes on green industries can encourage investment in these protective ventures.


Unfortunately, this behavioral control mechanism is not fully utilized in our islands. European countries, for example, charge very hefty luxury taxes on vices while keeping collections minimum for education. It sends a message to people that if you want to use your money for unproductive activities, you have to pay a high price for it. If you use it for something desirable, you will get some reprieve from the tax collector.


In our case, the government has already tried to impose greater taxes on book importations. It failed mainly due to political pressure, not sound judgment. Many legislators have proposed large ‘sin taxes’ but they keep getting stopped in their tracks by industry lobbyists, resulting in the cheapest liquor and tobacco to be found in the region.


Governance is one great social experiment, and although there is some leeway for creativity, there are general policies that ought to be maintained. Education must be supported while violence is to be eliminated. Productivity and hard work must be encouraged while destructive behavior must be penalized. Health is to be protected while environmental damage must be kept at a negligible minimum. 


For now, it is comforting to know that our Constitution has tax measures that protect educational, religious and civic interests. But even the solid foundations of our organic law are being grinded by our so-called ‘representatives’, who have very fat business interests. There are those intent in practically selling the country to foreign powers who have no interest other than profit, while local farmers walk on, landless. 


How do we steer national behavior when those who vote on these issues in our behalf have interests that conflict with ours – when those who command our tax collectors and cops give in to the temptations that such awesome powers provide? 


It all comes down to the populace and their ability to come together and express their frustrations and aspirations through their votes and their collective actions.


Democracy is not dead. It only remains misunderstood, misguided and unclaimed. In less than a year’s time, we will once again be collectively challenged to act with our best judgment. 


Let us steer the nation harder to a better place this time. 


No more excuses.

Death of a Taxman

Published in Cebu Gold Star Daily




Taxation is perhaps the most boring subject matter I can think of to write about (and the most detested subject for those who ever took the bar exams). But taxation remains, or at least it ought to be, the most effective tool for social justice. 


Long before agrarian reform, welfare and socialized housing, there was taxation. Taxes are nothing more than enforced contributions to society, where people give a certain percentage of their earnings to fund State services. It is clearly designed as form of socialism or equalizing device to shrink the gap between the rich and the poor. 


Here are the basic premises for taxation: 

1. People gain wealth by using State services and systems (e.g. land, business grants, government contracts, etc…). 
2. The more wealth you gain from this system, the more you have to contribute to keep that system running.
3. If you are poor, you need help, so you are exempted from giving your contribution to the State until you can rise to a level where you can support yourself and those who depend on you.

From this, we formed a system where the fortunate support the unfortunate to a certain extent so that the latter are given enough breathing space to improve their lot in life. Progressive taxation means that those who have more must give more, while those who have less are given assistance. 


In its proper sense, taxation ought to be taken from income – money that is gained. This ensures that taxes do not cut deep into the resources needed by people to survive. This ideal has been mangled because the rich find ways to avoid paying their rightful contributions to society. Those who ought to be supporting society are the hiding behind tax shelters and offshore dummy corporations. They avoid their social responsibility and make all these fancy legal excuses to justify greed.


So how does the government respond? By creating non-progressive fixed taxes, like the misleadingly named value-added taxes, that burden everyone equally, rich or poor. This painfully upsets the balance. After all, equal treatment of unequal people is inequality. The purpose of taxation is mangled, and people don’t know why they are suddenly paying 12% more for something that they’ve been consuming for a very long time.


On the other hand, people are quite justified in refusing to hand out their hard-earned money without seeing concrete results. Massive corruption and incompetence of government have left us a cynical people. Angry. Restless. Our taxes do not seem to be making more schools. They do not seem to stop the violence in our streets. They do not give us clean air or water. They do not seal the cracks on our roads or provide enough supplies to our hospitals. They do not seem to provide health, safety, justice, education, convenience or even access to state services.


The nasty people from both the business sector and government have turned us into this nation of whining idiots, always complaining about things we think we cannot control. They have transformed us into people who would rather ignore the difficult reality than actively steer it towards a better place. The greed of the few has virtually doomed us all… all because of money… all because our best defense against greed and inequality also involves money.


In spite of all this, I believe that a tight, disciplined and brutal taxation system managed by people with the same qualities is one of the keys to moving forward. Obliterate all the fixed taxes and optimize progressive income tax collection. This is the surest way to swell our middle class and give a fighting chance to our poor. 


The wealthy support the poor. 


That is the design. 


That is the way it should be.