No quick fix

Subsidies for the poorest of the poor as well as social services come from taxes, not collections of the Catholic Church or the stolen wealth of corrupt politicians.

If taxes on oil products would be reduced or abolished, leading to revenue losses amounting to billions of pesos, fiscal managers want to make sure there are alternative sources of funds for the delivery of basic services.

For the majority of Filipinos who can barely cope with soaring consumer prices, the proposal to suspend, reduce or abolish altogether the 12 percent value-added tax on petroleum products is sensible. Why should the government rely heavily on captive tax sources — items that no one can do without, such as fuel and electricity — when it can tax other sectors and demand better performance from corrupt revenue collectors?

But the administration knows there is no guarantee that corruption can be clipped and revenue collection can improve enough to replace the billions in oil VAT. The only way corrupt revenue collectors will mend their ways is if they are thrown behind bars, but then they might have to be pardoned ASAP before they start ratting on bigger fish. Old habits die hard, especially those that lead to rich rewards, and especially when certain influential individuals themselves are involved in large-scale tax evasion and smuggling.

The other alternative is to increase certain taxes or impose new ones on sectors that have long evaded taxation. But here an administration with little credibility and plunging popularity has a narrow room to maneuver.

The Catholic Church and other religious groups can give up some of their tax exemption privileges. With their vast wealth and the kind of clout they wield on national policy-making, why should they enjoy huge tax exemptions? Having a financial stake in government will make them demand that public funds are well spent. With all these religious groups demanding transparency and good governance, we might finally see a drastic reduction, if not an end, to fund diversions, fat commissions and shameless junkets.

If the argument for exemptions from taxation and agrarian reform for religious groups is that they give away their wealth to charity, the government has agencies for this — the sweepstakes and gaming firms that in fact contribute to religious charities. If the government can run casinos and the super lotto without a hitch, why can’t it handle its own charity operations? Charity is the only legitimate excuse for state-run gambling.

But then no one in either the executive or legislative branches has the guts to end the exemption from taxes and agrarian reform enjoyed by religious groups. So we can forget this alternative.

To replace billions in lost oil revenue, the government can also increase or impose new taxes on tobacco products and alcoholic beverages. Fuel and electricity are basic needs; so-called sin products are not.

But we all know who are the largest producers of sin products, and we all know how much their financial support counts during election campaigns. They have become as influential as the Catholic Church, Iglesia Ni Cristo and El Shaddai, endorsing appointments to the executive branch, the judiciary and constitutional bodies, and wielding their clout even in assignments and promotions in the military and police. So in congress after congress, proposals on sin taxes have never gotten off the ground.

Some quarters are reviving proposals to end deregulation of the oil industry. This means returning to subsidized fuel prices, and again, where will the subsidy come from? You don’t pluck subsidies from trees; they don’t fall from the sky like manna from heaven. Regulation also means returning to a regime where oil price setting is politicized. With the specter of $200-a-barrel oil, does the administration really want the burden of oil pricing on its shoulders?

People can quickly become addicted to dole-outs. But subsidies are difficult to sustain, especially in countries such as ours with limited financial resources. What happens when the subsidies run out?

Already governments that have maintained fuel subsidies are feeling the pressure of global market forces and are facing political instability and social unrest.

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The Catholic bishops, who relish the influence they wield through collaboration with this administration, should stick to spiritual shepherding and leave economics and fiscal management to the experts.

Since the bishops are among the biggest supporters of this administration, they should put enough faith in its fiscal managers, who have done a pretty good job so far in balancing the need to raise badly needed revenue and cushion the impact of current global woes while at the same time maintaining fiscal discipline.

Yesterday the government approved a fare increase for all public utility vehicles. That increase was expected and could not be withheld for long.

At the same time, the finance chief pointed out that it’s the rich that would benefit most from the abolition of the oil VAT. Later in the day, the administration said it was open to a “calibrated” suspension of the oil VAT, but only if it would not affect revenue and growth projections for the year. It’s gobbledygook to me, but it could appease those clamoring for things they can barely understand.

The administration has been reluctant to look at other measures. It has ignored proposals to cut or lift all those taxes tacked on to our monthly electricity bills, including the tax on the subsidies we are already shouldering for marginal consumers of electricity.

There are no quick fixes, no magic bullets for our current economic woes. Every measure that could address the problems will entail some pain and sacrifice.

An administration that feels it needs to go along with populist proposals to survive can only put the country in deeper trouble in the long term.