Business World, 5 February 2018


In Shakespeare’s Act III of Julius Caesar, Mark Anthony joined the funeral of, after Brutus and kindred souls had done the Ides of March number on, Julius Caesar. The starting line of his famous spiel included: “I came to bury Caesar, not to praise him.”

To the Thanksgiving Lunch for the passage of TRAIN Stage 1 at the Ayuntamiento de Manila, I came to praise the intrepid warriors who powered TRAIN over the top, and not to bury its badly attenuated namesake. I fully supported the original Department of Finance’s (DoF) TRAIN: it was finely tuned, met the canons of reform economics and was compassionate.

But after Congress did a number on the DoF TRAIN, the country got an attenuated law, still useful in the net, but clearly not the roar that the original would have been. The promulgators and supporters of the DoF TRAIN, mostly youthful and idealistic, Karl’s marauders I call them, aimed for the stars; the legislative leadership aimed, as it were, for the gutter. The compromise law was, well, a molehill.

True, we should be grateful that some real reforms were passed: taxes on fuel and petroleum products adjusted, some VAT exemptions abolished, remedies to bracket creep provided, and vehicle and sugar-based beverage tax adjusted and cash givebacks to the vulnerable. But the congressional powers also retained many more VAT exemptions for favored constituencies and at the last minute swung blindly to produce new imposts (e.g., coal tax and wheeling charges VAT) that would exacerbate power poverty and push back job creation in the Philippines. Such crass defilement of a work of art makes me boil.

The net revenue realization, said to be P90 billion, what with new and future freebies in the wake of the 2019 election and the recognized land mines such as the military pensions, will leave little for Build, Build, Build. Would that Build, Build, Build does not morph into Borrow, Borrow, Borrow!

I wept because instead of a roar, the final product (RA 10963) is a whimper. Twice a whimper under the “shock and awe” presidency of Rodrigo Duterte. While shock and awe is amply and routinely applied in the assault on political targets, it was hardly present in the economic battle. The few line item vetoes by Malacañang, though in correct direction, were hardly shock-and-awe standard.

Perhaps I was being naïve.

Didn’t I know that compromise is the heart of politics? Was not the Comprehensive Tax Reform Program of 1996 eviscerated in Congress on the revenue issue? One that took 15 years to correct with the Sin Tax Law? I dared to hope that the “fire and brimstone” president would finally muster the roar to lift the Philippines out of mediocrity.

Mediocrity? Does the Philippines, being an economic growth leader in this fast growing region of the world in the last three years, spell mediocrity? I am grateful for the growth spurt. But the name of the game is sustained growth for decades, not growth spurts. It makes a whale of a difference.

As a coffee shop denizen, I sometimes become reluctant witness to chatter, mostly of no consequence. But two weeks ago, I overheard the following conversation between a young affluent-looking dad and her daughter:

Daughter: “Dad, where will I study after the grades?”

Dad (in between barking sharp instructions to an apparent underling in his cellphone): “You will go and join your cousins in Canada. Go and never come back, ever!”

While the sentiment is familiar, I was disturbed by write-this-in-stone undertone: “There is no hope for you here!” Whereas our Asian neighbors have by now succeeded in reversing the diaspora of talent, the Philippines continues to push talent out. Growth spurts don’t do that. Sustained rapid decadal economic growth — the real target of original DoF TRAIN — does it.

The by-word during the Thanksgiving Lunch for TRAIN Stage 1 was: “This is just the first step!” For the lunch also saw the launch of “TRAIN Stage 2”: the lowering of corporate income taxes in return for the long-delayed reset button on, nee decapitation of, the chaotic corporate tax holiday system. The DoF will henceforth have the monopoly to grant tax perks for permanent control. The group assembled was raring to go. In this congregation of resolve, the pain of the brush-off was being buried under the avalanche of hope.

But TRAIN 2 will struggle against the headwind of the 2019 Senate election. The story oft-told is how incumbent Sen. Recto lost his senate seat after championing the VAT law. Good economics seldom makes good politics is the message of Joseph Capuno, Orville Solon, and this writer in a 2009 paper entitled Is Local Development Good Politics?

Worse, attention will be riveted on constitutional change, federalism, the death penalty and who knows, yet another scandal. Does this faze Karl’s marauders? No. They are on an unstoppable vortex of giving of themselves.

When I left DoF I asked the secretariat to procure a TNVS ride to the LRT station. Issa of the secretariat got me an Uber and off I was. As I made a move to pay, the Uber man said the trip is charged to Issa’s account. Grateful, I offered a hefty tip to the Uber man. He firmly brushed my offer aside saying, “It’s ok” with a smile. “Aha!”, I realized excitedly, “Übermensch!” Perhaps there is hope for the country.


*Übermensch is German for “superman”; it was the goal for all humanity to strive for in F. Nietzsche’s Thus spake Zarathustra (1896).