Recto warns of middle-class revolt over taxes

Sen. Ralph Recto on Sunday warned of a “possible” middle class uprising if the sector found itself burdened by too many taxes without receiving better service in return from the government.

Recto said the Aquino administration must consider other ways to raise revenues such as the oft-prescribed increase in government spending to create new jobs and expand the middle 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 said in an interview.

Sen. Joker Arroyo noted last week that senators were preparing a resolution to dissuade the government from raising Metro Rail and Light Rail Transit (MRT-LRT) fares and imposing the 12-percent value-added tax (VAT) on toll rates at all toll roads, including 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,” said Recto, chair of the Senate ways and means committee.

“The middle class is the biggest taxpayer. While we give (conditional cash transfers) to the poor, let us also not remove the subsidies for the middle class,” he added.

The senator echoed appeals made by his colleagues for the government to reconsider its policy of under-spending as a deficit-reducing measure.

“The government must spend its funds. Why is it not using them? Under-spending in (President Aquino’s) first year is understandable because at the 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, chair of the finance committee, and Sen. Edgardo Angara were the first to point out that the administration had 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 consistently pointed out the “unobligated funds” of various departments, an indication of their failure to spend the budget allocated in 2010.

Arroyo said the government was hoarding its tax collections and therefore had no right to inflict additional tax charges and burden the people.

“They must spend it. That’s what taxation is all about,” Arroyo said.