I found myself in a very high-end steak restaurant in BGC last week, where it was claimed that BBM had one of his birthday celebrations. The folks I was having dinner with were very high-end too. I was the only peasant present.
I was invited to partake of, among others, American Wagyu (strange – Wagyu means Japanese steak; this one is American-Japanese) and other steak cuts and types. I felt like a ‘nepo baby’ after checking the prices on the menu.
I guess I was invited because they were concerned about our situation and wanted to hear insights I could share. The guys, who are CEOs of various companies, came with their wives. Once the conversation got started, worries about what would happen next were palpable.
I had to tell them that nothing will happen unless BBM realizes his life depends on doing something quickly to be credible. The ladies agreed that the next thing that should happen is for heads to roll.
I told them the new Ombudsman seems to be moving like an Energizer Bunny, like Vince Dizon. The two of them are doing the tough job of making people believe something is happening and that heads will also shortly roll.
The ladies had strong views on how our taxes are being wasted, and one of them asked if we could have a tax boycott. One of the guys in the group was a former finance secretary, and he said that’s impossible because the poor would be deprived of the services they badly need.
The idea of a tax boycott is something I have been hearing a lot lately. People are very hurt after seeing those bundles of thousand-peso bills on a table ready for distribution to the congressional sponsors of ghost projects. ‘That’s our tax money’ is the common protest.
The ladies, who are probably managing the household budget, would be aghast if I told them that the 2025 national budget stands at P6.35 trillion, but the government only expects to collect P4.64 trillion in taxes.
As Finance Secretary Ralph Recto explained it, our government spends P17.4 billion every day but only P12.72 billion is covered by tax collections. Borrowing covers the rest, including what’s lost to corruption.
The national government’s outstanding debt ballooned to a record P17.56 trillion at the end of July, breaching its full-year projection for 2025, data from the Bureau of the Treasury (BTr) showed.
As for tax collection efficiency, the Philippine Institute for Development Studies (PIDS) found a tax gap of up to 50 percent of potential revenues in the Philippines.
A 2018 note by the DOF stated: ‘Our VAT collection is the most inefficient at only 40 percent’ (i.e., the efficiency of VAT collection relative to potential).
So, if we are only talking about tax collections, the beast should be starving by now. But heavy borrowing has kept the beast terribly obese.
Maybe the ladies around our steak dinner table are right about starving the beast. A tax boycott, or even a limited tax holiday, would force the government to be more efficient – but only if we also restrict the ability of the Treasury to borrow, like they do in the US.
We would risk shutting down the government, as it is now shut down in Washington, DC. The US can survive a government shutdown, but in our case, the inability to pay the salaries of policemen and soldiers would likely lead to a coup d’état.
The former finance secretary among us steak eaters that evening was right: we starve the beast at the risk of the beast turning on us.
But let us not give up on the idea of starving the beast. Maybe just put the beast on a diet, because an obese government cannot serve the people efficiently.
We have way too many senators, congressmen and other national and local officials. The government payroll covers about four million people, many of whom are probably ghost employees or of the ’15-30′ variety who collect salaries but do no work.
But making the beast go on a forced diet or austerity needs a president who is ready to set the example. We need someone like José Mujica of Uruguay, who was widely known as the ‘world’s poorest president’ for his simple lifestyle. He drove a 1987 Volkswagen Beetle and donated most of his salary to charity.
We do not have someone that ascetic on the horizon. Our politicians became politicians precisely because they want to get rich but are too dumb or too lazy to make good money the honest way. Only someone like a Lee Kuan Yew-type dictator can force our obese government to slim down.
So, where are we now? Our future remains dark. We are facing nine years of muddling through and low-quality governance -and after that, more of the same.
That means underwhelming governance that may, at best, result in mediocre growth amid political uncertainty. Forget investors, local or foreign, because who would want to risk money in a country like that?
The only thing we can do now is remain very angry and not let our leaders think our attention span is short and our anger will blow over soon.
The masa is still very patient. But our somewhat educated lower middle-class folks expecting better lives are now becoming the new poor. They may not be as patient. They are more resentful of their condition and could spark trouble.
The rich folks probably already have European golden visas, set to flee at the first sign of trouble. Their only problem is knowing the right time to flee.
Street protests are starting to knock at the gates of Forbes Park. That can only escalate if corruption and the hunger it exacerbates are not properly addressed.
We are all in the same boat – rich, middle class and poor. We must all try to save our nation.