It’s the process, stupid

I hate picking on Senator Manuel Villar. I value him as a friend and a man of many merits.

But friendship should not be a barrier to honest commentary. Anything publicly said ought to be publicly reviewed. Our people deserve nothing less.

Columnists are particularly vulnerable to being drawn to the Old Boys’ Club of the influential and the powerful. They share meals with the high and mighty. Because of this, they are prone to falling into the quaint fraternity of omerta where minor indiscretions among friends are left unsaid and unregistered in the public consciousness.

It is the duty of commentators, those publicly entrusted with media space, to be militantly vigilant about unwise things publicly uttered – whether they are uttered by friends or senators or both.

A seat in the Senate does not give one the license to say unwise things to our people. To the contrary, those elected nationally have a special responsibility to keep public discourse sane and public debate at a high level of quality. That is part and parcel of the public trust invested in them by the democratic process.

Manny Villar has been a lightning rod for editorial review the last few days.

The other week, he suggested that the Philippines extract some form of payment from Washington for taking a courageous and principled position on the fate of the Saddam Hussein regime in Baghdad. That utterance has been adversely reviewed. At this critical time for humanity, our proud nation ought not to behave like a cheap prostitute.

Last week, Villar uttered something that truly crosses into the realm of the absurd. He suggested, for the sake of improving public revenues, that the BIR hire bumbays to collect their taxes.

Indian nationals, those pejoratively called bumbay, have been caricatured as usurers, running "5-6" rackets plaguing micro-entrepreneurs starved for capital. These rackets, illegal under our anti-usury laws, raise the cost of money for market stallholders and street vendors. By raising the cost of money, they raise retail costs and therefore the prices of goods for poor consumers who patronize them.

The "5-6" racket is no small business. It is an underground financing network that rakes in billions.

We saw the power of the "5-6" syndicates when they financed public relations campaigns against Bayani Fernando’s effort to clear our sidewalks for the benefit of pedestrians. We saw the power of these syndicates when they tried to block efforts of government finance institutions to unclog the payroll process for public school teachers and other small civil servants.

The bumbay on a scooter is merely the caricature of a large syndicated financing operation charging criminally usurious rates on the most vulnerable of our people. The frontmen who collect from street vendors are only the tip of a large operation involving money sourced from other criminal activities or even from legitimate businesses run at the top by Filipinos, Filipino-Chinese and, to a minor degree, Indian nationals.

Those who mercilessly collect from the powerless vendor in the street do their job with great passion because of the sinful profits derived from this operation. This is not due to any exclusive skill associated with ethnicity.

If I had lost my conscience and indulged in criminal usury, I supposed I would be as passionate in collecting from vulnerable borrowers, too.

But, to paraphrase Shakespeare, conscience makes paupers of us all.

Manny Villar says we should recruit these bumbays to collect our taxes.

I looked closely at the media reports, hoping he said that in jest – even if that was against the odds. Villar does not have an established reputation for satire. Nor does he have a reputation for cruel irony – a craft that requires tremendous amounts of insight and wit.

I am appalled that, from all indications, he was making a serious proposal.

In which case, the following things must be said to clarify his mind.

First, and most obviously, we cannot hire foreign nationals to man our civil bureaucracy.

Second, there is a glaring difference between usury and tax collection. The skills required are vastly different. It is not just a matter of personal energy in the collection effort. It is a complex matter of having the correct policy, the correct system, the correct checks both on the taxpayers and the tax collector, and the correct rewards for doing one’s job with aplomb.

Third, the bumbay is passionate in doing what he does because he makes a lot of money from doing so. The crisis in our civil service is not just because the pay is low but that there is no system of rewards for doing one’s job right.

Fourth, the matter of a substandard tax effort is due to a complex of factors, not to the ethnicity of the collectors. Our tax system is confusing for the taxpayer. Our ability to monitor incomes is deficient. The margin for discretion is wide, encouraging corruption at a horrible scale. Nothing accrues to the tax collection agency even if it does its job right.

In a word, it is the process, stupid!

The solution to our tax collection woes is not to indoctrinate spirituality to the BIR rank and file. Liway Vinzons-Chato tried that with unremarkable results.

The solution lies in the more painstaking and intellectually challenging task of changing the process and the culture. There must be continuous innovation of our tax laws to shift taxes from income to consumption. Incomes could be concealed, consumption cannot.

The administration of revenue collection should be re-engineered in order to simplify procedures, eliminate the margin of discretion among collectors and raise the quality of taxpayer monitoring through computerization. That is the reason why there is draft legislation proposing a modern corporate structure national revenue administration.

Manny Villar should study the technically competent Agile recommendations on tax administration reforms closely before making off-the-cuff recommendations that endanger public appreciation of our problems. Before that, he should set aside his personal grudge against the poor nerds making policy recommendations that proved unhealthy to his personal wealth.

For if we follow Villar’s racially-afflicted recommendation about recruiting bumbays to collect our taxes, then it would follow that we recruit Jews to run our financial system, Germans to run our manufacturing, Japanese to operate our foreign trade, Singaporeans to manage our governance and senators to run our entertainment industry.

Then all will be well and we will not have to think too hard about reforming ourselves.