Taxation, Production, and Redistribution: Challenges for Philippine Development

Tax Commissioner Kim Henares is doing a very good professional job. No doubt that she knows her job and does what is expected of her office. Let's just hope that her fellow government officials — especially in the executive and the legislative (due to pork barrel!) — coordinate their plans with, and do justice for, the impressive tax collection initiatives of the Bureau of Internal Revenue (BIR). 

 

In taxation, policy coordination of all government agencies is a must. Otherwise, there will be a conflict between the overly enthusiastic tax collector and the disgruntled citizen taxpayers. In a word, the fundamental principle applies, the people must pleasantly feel and see how and where taxes are spent. It is the task of the government to make people appreciate and realize that taxation is a collective social development process in which the conduct of business — the producing, selling, and buying of goods and services — is a social activity that has socio-economic consequences and implicates the entire society. 

Next targets of the BIR are 'online sellers' and the 'informal sector'. Not an easy job at all! The 'informal sector' belongs to the so-called 'informal economy' precisely because they are out of government's taxation circuit. For sure, there will be conflicts especially in a situation where the government only enforces its right to tax people without fulfilling its responsibility to create conditions for 'full' employment, let alone 'formal' employment. I believe that the immediate and long-term strategy and goal for an effective taxation scheme — thus, an active and socially responsible citizenry in a vibrant economy — is to get people into formal employment. 

Accordingly, the Philippine state has to assert that it is the only authority that has the monopoly power to tax people, incomes, properties, and business activities within its territory and sovereignty. The government has to seriously address those known illegal taxation operations by organized criminal groups and syndicates such as the 'revolutionary taxes' and protection money which are reportedly collected by armed groups in the countryside or crooks in the cities.

Enforcement of taxation essentially requires political will. Yet, alongside political will is the establishment of a huge and reliable source or base of taxation — which only an industrialized or industrializing economy can provide. We need to have a national production system: [a] that produces goods, services, and enterprises to be taxed; [b] that employs workers to pay taxes; and [c] that institutionalizes a government that efficiently spends taxes for social welfare and infrastructure development. The idea is to build a production system which creates wealth for the nation in the form of higher incomes for the workers, bigger earnings for businesses, and larger tax bases for the government. The creation of this mode of production should be the first-order development agenda which shall serve as the foundation and lifeblood of the redistributive goals of taxation.