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Thursday, January 11, 2018

It is NOT TRUE that the Philippines’ new Tax Reform (TRAIN) bill is “anti-poor”

Every woman and her dog is saying that the recently-implemented Tax Reform for Acceleration and Inclusion (TRAIN) law is “anti-poor”. They cite how increased taxes on commodities will be an “additional burden” on the poorest Filipinos with increased costs incurred in procuring input into businesses being passed on to customers and “trickling down” to the hapless consumer.
The trouble with the Philippines’ screeching “activists” in the Opposition is that they have focused their whining on a narrow set of effects of tax reform. Changes in prices are always a consequence of any change in any tax regime. But prices are only a small component of a bigger system of variables that contribute to the behaviour of an economy.
An example that everyone can relate with is prices that affect the transport industy. Opposition “activists” complain that increases in fuel prices will “trickle” down to the ordinary jeepney driver (everyone’s favourite “victim”) who, in turn, will pass this on in the form of raised fares to the commuting public who then get slugged with a hit on their disposable income they could, we are told, “ill afford”.
It’s an incomplete cause-and-effect model upon which to build a shrill “activist” cause because it does not take into account other factors, such as the effect of less “millennials” using their daddies’ eight-cylinder SUVs and opting instead to make do with their lowly Honda Civics. Those who don’t have access to daddy-SUVs and already use Civics to make-japorms in Taguig, may even have to start to consider taking public transport (horrors!) as the initial shock of higher fuel prices hit their ability to buy their lattes every morning.
The effect of the price changes on millennials’ japorms budget introduces new variables to the hare-brained fuel price issue “activsts” screech about: (1) reduced demand for fuel could put downward pressure on fuel pump prices, (2) increased demand for public transport could push transport fares upward and (3) less lattes being brewed for millennials translates to less energy consumption and the resulting surplus capacity in the grid could have other flow-on effects.
Millennials also complain about increases in the price of those Vioses and Civics they are frantically saving up to buy (or eyeing as their next vehicle upgrade). But price increases on those commodity vehicles could dampen demand and force dealers to make even more aggressive and sweeter deals to their customers. This would then have the effect of more competitive selling that could turn this market segment into a buyers’ market — good for consumers, in short. And if vehicle sales dip just the same, that will mean more of these millennials jostling with the masses for a jeepney or bus ride on the streets — more business for the hapless bus and jeepney drivers (the so-called “victims” of this tax reform initiative). It could also mean that more buses and jeepneys need to be fielded to serve the increased volume of no-car commuters which, in turn, creates more of that much-needed “employment” the commies keep shrieking about.
The idea that this recent tax reform law is detrimental to “the poor” is just one example of dumb conclusions made using incomplete information. Nobody can claim to be an “expert” on how any new tax measure will ultimately affect the economy or individual peoples’ lives. For that matter, no set of factors that can fit into a single spreadsheet model can predict beyond the next several months how the economy will behave. Millions and millions of variables are at play and those millions eachinfluence millions of other variables. You can’t make pompous claims about who or what will benefit — or suffer — from a “tax reform” initiative on the basis of a small handful of variables cherry-picked on the basis of moronic political agendas.
People should just stop complaining about how “unfair” the world is and just get on with the business of making a living and making serious money out of that living. Filipinos, specifically, should stop worrying about how much money other people are making and, instead, focus on their own bank accounts and paychecks and think of more ways to fatten those.
“Activists” are a stupid enough distraction to the effort of charting one’s own future fortunes and only losers latch on to their “expert” opinion about taxes, the economy, employment, and all the other bullshit slogans they pepper with those words that they use to fill their protest rally paraphernalia. It’s high time Filipinos flick them the bird and get on with the business of real business.

About benign0

benign0 is the Webmaster of GetRealPhilippines.com.

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