Resignation, in catastrophic failures, matters

PNP Chief Hermogenes Ebdane, Jr. is wrong when he said his resignation, in the light of the Al-Ghozi escape, would not solve the problem. Perhaps it would not bring the fugitives back in their cells in an instant. But the resignation of the responsible official would send a message down the ranks of the PNP that a catastrophic failure such as this could cost them their jobs, if not their careers.

It is of no value to anyone that Gen. Ebdane, in a press release, assumed command responsibility for the embarrassing escape of an international terrorist if he is unwilling to take the consequences of such failure. Mind you, it is not an ordinary failure. Not only are we talking of a notorious terrorist, this was also not the first time high profile convicts escaped from a holding cell in Camp Crame. At last count, there have been three such high profile escapes.

That’s the other point. It did not happen in a rinky dink jail cell in the hinterlands of Samar but right there at General Headquarters, Philippine National Police on busy EDSA. I watched DILG Secretary Lina trying to explain away at an interview program on ANC and he was a sorry sight. If our high officials have any honor left, they would have resigned right away.

Joey Lina was talking about a problem with the hinges of the iron grill cell door or something like that. Heck, any jail warden who cares for his job would have made fixing that his top priority. In any case, he wouldn’t have placed a notorious and high profile convict in such a defective cell. The more they try to explain, the more they expose their incompetence.

Chief Ebdane was also reported to have suggested that sinister forces within the PNP lusting for his job are behind the caper. Lina says it was designed to embarrass Ate Glo. Assuming Ebdane’s and Lina’s suspicions have basis, whoever these shadowy figures may be surely proved their point that Ebdane and Lina are not in control of the PNP. Another good reason why they should go!

I remember an incident in Japan many years ago when a Japan Airlines plane crashed killing a number of people. The Japanese Transport Minister resigned after taking responsibility. I could not imagine why he did that since the crash was obviously an accident and the minister was as far removed from the cause of the crash as anyone could be. But he had a sense of honor when he assumed responsibility.

Then there is Ate Glo. What happened to the Strong Republic? Heads should have rolled as soon as she heard about the escape. No explanation, no excuse should be good enough for such a big international embarrassment like this. No pathetic "shape up or ship out" threats we have heard before. No one more last chance. Ebdane and Lina should take responsibility and lose their heads in the process. Otherwise, who is the public official who will take his or her job seriously? It is alright pala to fail in such catastrophic scale and still keep his or her job. No wonder no one takes government seriously, the least of all, the officials who run it.

Ate Glo should realize her failure to take control in a crisis situation is another dagger in the heart of business confidence in our country. Photo op taray is not enough. This image of sheer anarchy is so devastating to the country’s morale and to even to Filipinos abroad. It shows lack of leadership.

VAT

It is that time of the year again when I must work on my quarterly VAT returns. Again, I feel bad about it because small taxpayers like me who were included in the VAT law effectively absorb the 10 percent tax unlike large taxpayers who can really work out this input/output VAT system or have the clout to pass the VAT to their clients.

Given that I am already in the highest tax bracket of over 30 percent for my regular salary income, VAT makes me effectively pay over 40 percent of my total income in direct taxes. Add to that the indirect taxes in every commodity or service I buy, I wouldn’t be surprised if I am paying 50 percent of my income to the government in taxes.

Half of my income in taxes? That’s a disgusting thought. It is almost as if I have a demanding mistress. The only difference is, I imagine a mistress would give a lot of pleasure in return. The government can’t even give the service you are paying for. Worse, when you have to deal with government, you are left to the tender mercies of its bureaucrats who act like merciless pimps bleeding you for more.

Speaking of VAT, there is this recent article by Nobel prize winning economist Joseph Stiglitz in The Guardian entitled: Don’t trust the technocrats. He cites a number of examples to support his thesis and one of them is VAT. This is what Stiglitz thinks about VAT.

Its advocates argued that efficiency required adopting a value added tax. Advanced industrial countries in Europe use such a tax. Developing countries, the technocrats said, should do likewise. But there is a fundamental difference between developed European countries and emerging markets: the size of the informal sector, from which VAT is not collected. This vast "black economy" makes VAT inefficient in most developing countries.

Indeed, because VAT is a tax on the formal sector whose incomes and expenditures can easily be traced (as distinct from those of the cash-based street vendors, village enterprises and poor farmers) – VAT impedes development.

Developing countries that impose VAT perversely encourage production to remain in the informal sector. But it is the formal sector that produces higher value-added manufactured goods that compete with developed countries.

There are other sources of tax revenue in many developing countries that are both more equitable and distort economic incentives far less than VAT. Many developing countries lack a corporate income tax. It may also be possible to impose taxes on luxury goods (many of which are imported), thereby promoting equity without stifling growth.

Economic theory supports VAT only if one does not care about distribution and if one can impose a tax on all commodities. You don’t need an economics PhD to recognize that, in developing countries, you can’t impose a tax on all commodities. Moreover, you should care about equity.

See that... even Stiglitz supports high taxes on luxury goods and we are lowering taxes on luxury cars, thanks to the technocrats at BOI. Lucky for us there is a Sen. Serge Osmeña who blew the whistle and fought the technocrats on that issue. Still, the technocrats got much of what they wanted. Taxes on high end Benzes, Volvos and BMWs will still go down significantly, even if less than they wanted to.

On the other hand, I blame the technocrats at DOF and former Sen. Juan Ponce Enrile, the self proclaimed tax expert, for the untimely introduction of VAT in this country. They succumbed to the "expert" advice (or imposition) of IMF and maybe World Bank technocrats who as Stiglitz had time and again denounced are either misguided or blindly following some ideology irrelevant and even harmful to us in the developing world.

In the meantime, I am paying half my income in taxes. What a mistress! It f–ks you alright but gives you no pleasure. Just pure pain. And I don’t think I’m kinky enough to enjoy that.

It works!

A lady noticed her husband standing on the bathroom scale, sucking in his stomach. She commented, "I don’t think that’s going to help."

"Sure it will." he said.

"It’s the only way I can see the numbers."

Boo Chanco’s e-mail address is [email protected]