MANILA, Philippines—Senator Ralph Recto warned of a “possible” middle class-fueled unrest if it found itself burdened by too many taxes without the compensation of better service from the government.
Recto urged the Aquino administration to consider other ways to raise revenues such as the oft-prescribed increase in government spending to create new jobs that would eventually expand the middle income class.
“The middle class is the piston of the economy. Let them go up the ladder. The best way to extend public revenue is to expand the middle class because (creating conditions) that would make them join the poor could lead to social unrest. That’s possible,” Recto warned in an interview.
Recto, however, did not explain in what form middle class unrest could take shape.
Sen. Joker Arroyo said last week that senators were preparing a resolution to dissuade the government from fulfilling the plan to increase Metro Rail and Light Rail Transit (MRT-LRT) fares and impose the 12 percent value added tax on toll rates at the North and South Luzon expressways.
“The best way not to grow the economy is to hit the middle class. But if we create jobs, we can actually collect more taxes without necessarily creating new measures because more (people earning) salaries can mean more (people paying) taxes,” Recto explained.
“The middle class is the biggest taxpayer. While we give (conditional cash transfer) to the poor, let us also not remove the subsidies for the middle class,” he added.
Recto noted that the middle class has been the chief users of the railway systems in Metro Manila and the usual motorists using the expressways north and south of the metropolis.
“Why not improve the service of the MRT first? Give the middle class a reason to understand why the fee needs to be increased before the government does so,” he asked.
The senator echoed appeals made by colleagues for the government to reconsider its policy of underspending as a deficit-reducing measure.
“The government must spend its funds. Why is it not using them? Underspending on (President Aquino’s) first year is understandable because at that time, the government was still studying the proper way to save money but in the third and fourth quarters (of 2011), we can already improve spending to spur growth,” said Recto,
Sen. Franklin Drilon, chairman of the Senate finance committee, and Sen. Edgardo Angara were the first to point out that the administration has refused to spend a significant portion of its 2011 budget, apparently as a corruption-minimizing measure and also to reduce the deficit.
In the ongoing budget deliberations in the Senate, Sen. Panfilo Lacson has consistently pointed out the “unobligated funds” of various departments, an indication of their failure to spend monies allocated in 2010.
According to Senator Arroyo, the government has been “hoarding” its tax collections and therefore has “no right to inflict additional tax charges and burden the people. They must spend it. That’s what taxation is all about.”