Better revenue for poverty reduction

Editor's Note: This is a column originally featured on the Daily Gurdian of Iloilo city May 31, 2019

 

RECORD revenue collections this year from both Customs and the Bureau of Internal Revenue (BIR) already show that government is much more serious in plugging revenue loopholes that were once exploited by smugglers and tax evaders.

We hope that the trend continues and that eventually, tax cheating and smuggling will no longer be as pervasive as it used to be.

After all, we have the technology and institutions that can now enable us to collect better taxes: the BIR has the country’s most powerful computer and that the TRAIN law has put in place tax administration systems such as the 8% tax on gross income that makes it easier for companies to allocate and pay taxes. For these we laud the Department of Finance and our other economic managers.

In the end, it does not matter whether we like government or not. Services, particularly to the less fortunate will depend on how much money the government makes.

Higher revenue means more money to spend to build infrastructure and put in place poverty reduction programs. We cannot simply let the market or foreign investments do the job. We have been trying that for a long time. It has not worked

That said, aggressive spending programs will be needed to reduce our already lowered poverty rate from 21% to 15% by 2022.

In the previous administration’s six years, we reduced poverty by only one percent. On the other hand, our neighbors such as Indonesia and Thailand have done better in the same time. Thailand is down to 5% and Indonesia down to 10%. Did they spent more in infrastructure and poverty reduction? Perhaps.

With this, the expanded social programs to fight poverty that were recently signed into law such as the 4Ps Law, the Magna Carta for the poor, Sagip Saka Laws, and the universal health care access law, plus the earlier free state college tuition and free irrigation will  therefore depend on how well government earns its revenue.

Will this new government succeed where others failed? We hope so.

This hope is nurtured by the fact that unlike before, the programs mentioned now have committed to actually fund programs meant for poverty reduction.

In the past, under spending on these vital areas, including infrastructure (we spent 2.5% of GDP, well below the standard 5% that our development partners recommend) also meant that such programs for the poor were nonexistent.

The Magna Carta for the Poor was not enacted then, and many infrastructure projects especially in the countryside were discontinued.

Truly, we saved a lot of money, and even contributed half a billion dollars to international agencies, but left our people to deal with high education costs, broken down trains and bad roads.

Nonetheless, the benefit of poverty reduction means increasing the ability of the poor to participate in the economy. This translates to a stronger economy, since more people with the financial ability to buy products keeps businesses growing.

Like a self propelled engine, this creates the inclusive economy that propels growth further. Inclusivity is what we need, and have been needing for a long time.

Moreover, getting the poor out of poverty is what differentiates a developed economy from a developing one.

It’s time to get more of the poor into our growth. We will need to earn money from our taxes and other revenues to fund efforts to do so.