Universal social protection possible with progressive taxation, development experts say

The GOVERNMENT must pursue a more progressive taxation system and improve its tax administration to address budgetary constraints in providing universal social protection in the country, experts said.

During a University of the Philippines (UP) PILIpiLUNAS 2022 webinar on the National Social Protection Floor on Monday, former Undersecretary of Labor Rene E. Ofreneo said that countries with very strong social protection programs strong implement a progressive tax system, where the tax rate increases as taxable income increases.

Ofreneo, former dean of the UP School of Labor and Industrial Relations (Solair), lamented that the Philippine government has pursued “regressive” tax measures with the passage of the Tax Reform for Acceleration and Inclusion (TRAIN ) and the Business Resumption and Tax Incentives for Business Acts (CREATE).

“Build [the] more progressive taxation. This has long been pushed by progressive economists like Joseph Stiglitz, but the opposite has happened here. There was TRAIN, which focused on more taxes for the masses, the oil excise tax, and then we also had CREATE, which offered tax incentives for big business,” Ofreneo said, speaking partly in Filipino. Providing universal social protection is a way to tackle poverty and inequality, he added.

Assistant Professor Herisadel P. Flores of UP Diliman-National College of Public Administration and Governance (NCPAG) agreed with Ofreneo that it is vital for the government to pursue more progressive taxation, but stressed that improving tax administration is equally important.

“I think it’s also worth mentioning that the pursuit of more progressive taxation should also include the review of taxation done at the local government level,” Flores said.

In addition to this, the government, he said, should streamline the roles of local government units (LGUs) in terms of implementing social protection programs, particularly in view of the Court’s Mandanas ruling. supreme. While the decision paved the way for a greater share of LGUs in taxes and duties collected by the national government, some national government functions will be fully devolved to LGUs no later than the end of 2024.

Mom. Victoria Raquiza, associate professor at UP NCPAG and co-host of Social Watch Philippines, also said that even low-income countries, such as Bolivia, Lesotho and Namibia, have been able to have this fiscal space to put implementing universal pension programs before the Covid-19 pandemic.

Raquiza recalled that the Philippine government was able to implement the conditional cash transfer even though it had to borrow heavily to finance the program due to the political will of policymakers.

“Of course, that’s not to say fiscal space isn’t real, it’s real, it’s still a concern. But we can build [the] institutional capacities to develop our fiscal capacity over time as long as the vision is clear and there is political will,” Raquiza said.

Joel C. Hicks