Raising taxes no way to meet recession
Philippine Daily Inquirer
First Posted 03:25:00 12/03/2008
Filed Under: State Budget & Taxes, world financial crisis, Economy and Business and Finance
Why is it that when the government needs to refill its empty coffers, its solution is always to raise new taxes, especially the “sin” taxes on cigarettes and alcohol? Recently, administration officials asked lawmakers to pass new tax measures to help finance public works spending. Finance Secretary Margarito Teves proposed higher taxes on tobacco and alcohol, or “revenue enhancements,” as he called them, to improve tax collection and help cover the budget deficit.
I’m an engineer, not an economist, but if I remember my Economics 101 right, raising taxes or “enhancing revenue” has this adverse effect of diminishing money in circulation. In a recession, such as the world is going through, the impact would be catastrophic.
I suggest that our brilliant economists in the government ponder the lessons of history, and lift a page from the Great Depression of the 1930s. US President Franklin Delano Roosevelt, instead of raising taxes, launched public works projects to generate millions of employment opportunities. This ensured that Americans would be receiving salaries and the money in their hands revived the ailing US economy.
The world is in recession. We need to rethink our ways of addressing budgetary shortfalls, and do away with raising taxes, which is a quick-fix solution. Better to improve tax collection efficiency and crack down on smuggling.
ARTHUR V. NUGUID III (via email)
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