Tuesday, August 16, 2005

E-VAT, Oil Price Hike, and political noise

It seems that Finance Secretary Gary Teves and economic adviser Joey Salceda are going to figure in somewhat of a debate over the effects of the unfreezing of the E-Vat law.

On the front page of the Philippine Daily Inquirer, Teves was quoted as saying that 'Deferring VAT will hurt the poor' and Salceda takes the opposite position with "GMA Aide warns of economic meltdown".

Between Whitey and the Gay guy, I'd go with the gay guy. He cites example after example of how implementing a new tax measure at a time when the economy seems bent on tilting will contribute to its virtual demise.

Of course, he was talking about Argentina -- and to most people, that's just a cornbeef brand. But those who've listened during Economics 101 will basically agree with the Gay guy's arguement, citing historical precedent as the basis for concluding that similar results will take place. Then again, Economics 101 will also tell us that there can never be a real comparison between dissimilar systems -- as each economic system is unique and each system functions under very different circumstances.

Whitey just basis his arguement on a plea to shield the poor from the ill effects of a budget deficit and what not. Well, how can you teach an old dog new tricks?

Mr. Teves, how can taxing the poor eventually uplift their lives?

It is not the poor that reel from new taxes, it is the middle class (or whatever semblance of it that we have) and if new taxes kill off the middle class, you'll be contemplating economics with millions of serfs.

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