Many lawmakers seem to think that tax reform can be achieved even with just its revenue-eroding provisions, and without its revenue-enhancing provisions. In other words, they believe that we can make the tax system more equitable without offsetting the revenue losses it will generate.
Unfortunately, watering down the bill this way could only defeat the purpose of tax reform, and the government may end up with significantly fewer resources to spend both in the short and long run. For instance, without significant revenues, the proposed infrastructure “golden age” will be a pipe dream.
Lawmakers are right to believe that imposing new taxes on diesel, petroleum, and automobiles will somehow stoke inflation. Their apprehension is completely understandable: with the May 2019 elections fast approaching, the phrase “new taxes” might hamper their reelection bids.
Even so, our lawmakers need only ensure that the tax reform bill includes provisions that will cushion the effects of temporarily higher inflation. Also, with the vast popularity of the President, there’s no politically better time to push for a contentious tax reform bill.
If only our lawmakers set aside their politics momentarily, we can use this rare window of opportunity to solve our tax system’s enduring problems once and for all. – Rappler.com
The author is a PhD student and teaching fellow at the UP School of Economics. His views do not necessarily reflect the views of his affiliations.