THE country’s economic managers expect that tax reform under the Duterte administration, specifically the TRAIN (Tax Reform for Acceleration and Inclusion) series, when completed, will help create an environment that is more conducive to high growth and investment, jobs generation and faster poverty reduction.
TRAIN 1, which took effect in January, is projected to boost government revenues in 2018 to 16 percent of gross domestic product. TRAIN 2, barring hitches in Congress, is projected to boost revenues to 16.7 percent of GDP in 2019.
All these projections are well and good but a recent story in this paper also cautions against just using numbers and percentages for measuring national success and the general well-being of a country’s people.
Some local economists, for instance, said even GDP numbers are not the end-all and be-all of everything. They said the 6-percent expansion of the country’s economy in the second quarter may be on a par with the economic performance of other Asean countries, but this does not automatically translate to higher incomes and more jobs.
“I don’t think it means much to ordinary Filipinos. The GDP does not totally translate to income and jobs because it does not account for who gets what,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror.
Terosa said a high economic growth may help Filipinos cope with inflation, in terms of alleviating the impact of rising prices on household incomes and consumption, but this can only happen if Filipino households are part of sectors that are considered drivers of economic growth.
Another economist, Calixto V. Chikiamco, said enabling the poor to access the benefits of high economic growth means making it more inclusive. This means growth should translate to better jobs; raise agricultural productivity, where a third of the country’s poor are; and healthy competition to help temper price hikes.
We agree with their views. GDP is simply a measure of the money that changes hands within the economy. It may be a good indicator of economic prosperity but it is also not a complete one. GDP can measure a country’s wealth but it cannot tell us whether this wealth is going to most of our poor citizens or only the executives of the big companies and the rich who live in exclusive villages. GDP also does not show that the record remittances, which make our economic figures so rosy, also leave a heavy social toll in terms of broken families.
Our country’s GDP numbers have been good enough to maintain our status as one of the fastest-growing economies in Asia, following Vietnam and China, but this performance has not benefited most working families—not the overseas Filipino workers who still cannot find decent jobs in their own country and not those who can barely eke out a living here.
Further overhauling our tax system to solve its inequities and boost economic growth is not enough. Ordinary workers and the poorest of the poor must feel the gains of our so-called robust economy, especially now that they are being bled dry by the high prices of goods and basic necessities.
Workers are doing their part, paying taxes dutifully. But where is the money going? What is the government doing with the taxes?
Can workers even count on the government to provide safe, efficient mass transportation to get them to their workplaces? Or solve pollution, worsening traffic gridlocks, floods and crime? Can workers who need health care go to any public hospital and get quality treatment? Can they send their kids to public schools and get quality education? Can workers rely upon the government to take care of them if they lose their jobs, or when they grow old and retire?
The government must be able to guarantee the basic things its citizens need.
Image credits: Jimbo Albano