Monday, March 4, 2013

Tax the elite more, create a stronger middle class

An Agence France Presse published an article which I believe we know already. While, admittedly, the economy right now is pretty much functioning as expected, the gains this economy is amassing is not trickling down to the basic sectors of society. Seventy six percent of this goes to a very small group of elites who are not even one percent (1%) of the 90 million plus Filipinos on this planet.

Fact is, six percent of that wealth goes to two familiar names--Henry Sy of SM and Lucio Tan. Their combined wealth is estimated at about US$ 13 billion.

Credit that to a decrepit system, says Cielito Habito, respected economist. Habito admits that we have a defective system, and even if we improve further, chances are, little will these changes impact on the lives of the people.

Habito is saying that the present system of capitalism does not allow the wealth of this nation to trickle down to the masses. Why? Honestly, one of the sure fire way of getting that wealth out, and into the hands of government unto the basic sectors of society is taxation. We tax those who profit more. The thing is, our system is still very much corrupt, and we don't collect taxes. Lucio Tan, for example, is known to evade payment of his taxes. NUmerous cases were filed against him, and eventually, yes, the government did collect but it was billions of pesos lower than it expected.

And where did government spend all those monies collected? A fraction goes to line up pockets of the corrupt, another fraction to fund projects that are overpriced and another fraction goes exactly where the needs are, yet, came so late that the problem has already ballooned to twice the size it was several years ago.

The solution is simply create a stronger and more financially capable middle class that will try to wrestle all these wealth out of the hands of a privileged few. As the economy grows, opportunities abound yet these opportunities are limited only to those who have enough funds.

Government intervention must happen. Government must fund business ventures of the middle class so that it widens or expand the numbers of the middle class. Because as it expands, it widens opportunities still for those who belong to the lower classes to fight they way up the ladder.

Three things: we need to work out a more effective taxation system, get government and the private sector involve in funding business initiatives and create opportunities for the people: more jobs and more credit facilities, so that entering or going into business is not as prohibitive as it is right now.