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Action for Economic Reforms

THE IMPORTANCE OF THE SIN TAX VOTE

By itself, my vote will not count. My beliefs and preferences do not reflect those of the majority. Probably, other voters think the same way I do—that the individual vote is insignificant. (Hence, the excuse of some to sell their votes.)


But I am likewise a believer in collective action. Putting aside people power revolution, which is rare and hard to mount, the best form of collective action to effect change is the ballot.


The Iglesia ni Kristo (INK) or the National Democratic Front (NDF) by itself is not a kingmaker, but how it harnesses collective action leads candidates to seek its support. Well, one need not belong to an organization to spur collective action. Kris Aquino has the ability to cast her magic spell; so does Judy Ann Santos. I wonder why Jamby Madrigal did not get Judy Ann’s endorsement.


For neither do I have the INK’s or NDF’s power to command nor Kris’s magnetism, my intent is modest: to systemize my thoughts through writing and convince my wife, my mom, and my best friend about my vote. That’s still a way of doing collective action.


Consider that the 2013 elections have been framed as a referendum on the performance of the PNoy administration and the continuation of reforms. Indeed we need to support those candidates who have taken part in the formulation or legislation of reforms.


The reforms have to be consolidated. Vested interests are motivated to reverse the reforms. Think of the tobacco industry, which will attempt to amend the sin tax law.


Furthermore, more reforms cry out to be done. Take fiscal and tax measures. Despite the passage of the sin tax (the threat of reversal remains), and the heroic efforts in tax administration, the required level of tax effort is of great magnitude. Amid high growth, public financing is growing, especially for infrastructure and for areas with market failure. Government has to source revenues over and above the incremental amount from the newly legislated sin taxes.


The next Congress thus not only has to defend the reform recently passed. It must likewise pass new tax measures. Vested interests will oppose proposals to increase mineral taxation and rationalize fiscal incentives.


The administration must likewise consider increasing the petroleum tax, no matter how politically controversial it is, if only to correct the decline in the real value of the specific tax from gasoline.


Increasing the petroleum tax is an effective way to address the short-term and long-term problems of urban traffic. In the short term, a considerable increase in gas prices will reduce the volume of vehicles on the main roads during peak hours. In the long term, the additional revenues from the tax increase can be used to improve the public transportation system.

The point is, using tax policy as an illustration, we need to elect senators who will be consistent in pushing for hard reforms and bold in resisting vested interests and misguided populism.


How candidates stood on the sin tax or how they voted on this issue is a good proxy of how reliable they are as reformers. The sin tax is not a single issue. It in fact embodies the essence of the reforms that the country needs at this stage of our history.


The sin tax is a health reform. The basic characteristics of the sin tax, including the high tax rates and the unitary taxation for tobacco products, will reduce consumption by almost half. In addition, the incremental revenues from the tax will finance universal health care.

The sin tax is an economic reform. It boosts government’s revenue effort at the same time that it expresses the seriousness of government in pursuing difficult economic reforms. This has led to a hard-earned investment upgrade, which ironically in the short term will attract hot money.


The sin tax is a reform for good governance and institutions. The victory of the sin tax law is a defeat of historically powerful particularistic interests. These are vested interests associated with rent seeking and pulling strings in the Executive, the Congress and the judiciary.


The PNoy administration deserves to be commended for having such reform passed. But here’s the catch: Not all the candidates of Team PNoy are reliable, based on their behavior on the sin tax. One candidate, Chiz Escudero, even opposed the sin tax bill. Two other candidates, Alan Peter Cayetano and Loren Legarda absented themselves in the vote to ratify the bicameral conference bill, which won by a margin of only one vote. They must give a convincing explanation for their disappearance during the most crucial vote.

It is ironic that the leading candidates of Team PNoy are the unreliable ones but those who are struggling to win, namely Jun Magsaysay, Risa Hontiveros, and Jamby Madrigal are the proven reformers.


One candidate from Team PNoy, who is in the winning column, deserves citation: Koko Pimentel. A generous campaign supporter asked Koko not to show up for the ratification vote. Koko showed up for the vote that really mattered. As a result, he lost some wherewithal for the election campaign, but he has kept his integrity and has enhanced his reputation as a clean politician.


Although I remain suspicious of some Team PNoy candidates, I have nothing good to say about UNA. It is a party of the ancient regime—those loyal to Estrada and Gloria Arroyo.

And it is a party whose leaders like Juan Ponce Enrile have obstructed the great reforms like the sin tax. UNA candidate Gringo Honasan voted with his godfather Enrile in rejecting the sin tax reform. Other candidates like Jackie Enrile and Migz Zubiri also oppose the sin tax and if elected, will attempt to amend or reverse it.


We cannot allow UNA to disrupt the momentum of reforms. We must elect a core of reformers who will defend the gains and fight for big reforms beyond the term of PNoy.

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