The Philippine Online Chronicles

This is how change begins.  The air is bristling with possibilities.  Can you feel it energized by Hope and Faith in our unified Future?  Before a room of 800 senior executives that make up the Makati Business Club, the Management Association of the Philippines, the Financial Executives Institute of the Philippines and the diplomatic corps, was Senator Benigno S. Aquino III delivering his first policy speech and when it was over: a standing ovation.

Change is off to a great start.

This is what Noynoy Aquino envisions for the Philippines: a country where taxes are lower and where markets are free to encourage entrepreneurs and enterprises to invest for jobs to be created.

Is that possible?

“As of November 2009,” Senator Aquino noted, “the deficit of the national government already reached PHP272.5B, or 4.1% of GDP.”

These are facts:

• • BIR Collection fell 5.5%.
  • Bureau of Customs Collection declined 16.6%.

These are estimates lost to corruption:

• • 280 Billion Pesos in 2009.
  • Over 1 Trillion pesos between 2002 and 2009.

“For the first time in recent history,” Noynoy Aquino said, “that absolute revenue declined.”

The atmosphere seems dismal. The task before us daunting and yet amidst these truths, an Aquino administration is confident that it will avoid imposing higher taxes or introduce new taxes.

Okay, that sounds crazy doesn’t it? Tax revenues have declined, and Aquino wants to lower taxes.  How is he going to achieve all that?

Aquino says he will crack down on two things:

• • Smuggling;
  • Tax Evasion.

As President, Mr. Aquino will continue with existing and successful programs such as the “Run After Tax Evaders” (RATE).  In fact, Aquino said that his campaign and future administration is already hard at working hand-in-hand with reform minded career executives from the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR).

Fact: tax collection fell from a high of 17% to 13% (update: tax effort) today.

Noynoy Aquino believes that if government can raise tax collection from 13% to 15% and that change is equivalent to PHP150B more revenues or 55% of our current deficit of PHP272.5B.

This is what we lose due to inefficient infrastructure: PHP2 Billion worth of fuel.

To solve this, Noynoy Aquino proposes to transform infrastructure project from sources of inefficiencies to “examples of cooperation and efficiency.”   He envisions Local Government Units (LGU) and Infrastructure agencies to work hand in hand with the private sector “by bringing forth an agreed public infrastructure program based on a cohesive plan that optimizes the value of the entire network.”

This infrastructure program is aimed also to invigorate the economy.

Fact: administrative costs in Agriculture cost tax payers a lot such as P60M lost by the government to National Agribusiness Corporation.

Noynoy Aquino will review the Department of Agriculture’s entire current program and encourage the use of supply chain management.

“What is it that we want to change?”

• • Repair the damage on our democratic institutions;
  • Improve the situation of our people;
  • Give our young opportunity to improve ;
  • To make government leap from patronage to development.

For far too long our government has been strangling the nation with not just high rhetoric but heavy taxes. This speech was filled with substance that critics of Aquino must now answer. The new direction in tax collection personally I find, is a welcome relief.

The present administration has been strangling the people.  Everything is taxed to the point that there is nothing to be squeezed.  That the high tax rate forces even more corruption to avoid paying exuberant tax rates.

The present administration has reached a point that to raise revenue it has attempted and circumvented an International Treaty that says, thou shall not tax book importation.  It has attempted to raise taxes by taxing SMS.

Why is Noynoy Aquino’s plan to eventually reduce taxes good for you and me?

Translated into human terms, tax reduction opens a door to allow people to either save more, or spend in the economy.  It allows people disposable income to spend on more things other than food.  It raises the quality of living, and more people buying, means the economy is breathing, and money is flowing.

Just imagine that the money you earned, actually benefits you.

Mr. Aquino aims to make government more efficient. The cynical may argue that “government and efficient” used together is an oxymoron. Given billions of pesos lost to smuggling, and tax evasion, given almost three hundred billion deficit and given that current efforts to raise revenue have fallen short, Mr. Aquino’s policy speech outlining his intent is a breath of fresh air.

After nine years, the clamor is to abandon everything wrong with the status quo and to cast it off.  Noynoy Aquino intends to shift the status quo of economic survival into robust economic growth.  It is that firm belief that we can change the system.  It is now the moment to take the leap from patronage to development.

It will be interesting to see, in the weeks and months to come, as the campaign advances forward the specifics for the massive infrastructure project that Mr. Aquino intends to accomplish.

The fight to unravel the tendrils of corruption; the great task of Institutional Reform, the massive investment in infrastructure, these are the steps needed to move forward.  Noynoy Aquino and his Team understand the threats of tomorrow and clearly have a plan that is not shallow.

Today, we saw an inkling of what a future Aquino Administration could be, if elected in May.  It is a promise to transform the poor Philippines into a middle class Philippines.

This is why the air bristles with possibilities.  This is why Change is off to a great start. This is Noynoy Aquino’s vision in his own words:

“My vision is to transform our country into one where we have lower tax rates enjoyed by all, rather than have some enjoy absolute tax exemptions while we burden the rest of the economy with very high tax rates.  I believe that markets are better than government in spotting where the growth opportunities are, and, with universal low tax rates, we will encourage entrepreneurs and enterprises to invest and create jobs in any industry.  We will therefore, pursue the rationalization of fiscal incentives early in my administration.”

Finally, we have a serious presidential candidate talking about policy and real issues. That is what people have been waiting and hoping for.  If today is an indication, then this election is Mr. Aquino's to lose.

"Tayo, sa halip na kayo at kami."

This is how change begins. Noynoy Aquino intends to push for a government of unity and coupled with a push to plug leaks in the system of tax collection, reduce smuggling, invigorate the economy through an infrastructure program that is about cooperation and efficiency, and lower tax rate for all.  Noynoy Aquino's Economic Vision can be distilled further into these four simple words: “a Philippines that Works.”

Image by author. Some Rights Reserved.

It is mashup up that I made from an image via Noynoy Aquino Campaign and an image of a Dove.

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