Recto’s shell game

The watered-down sin tax bill Senator Ralph Recto revealed last week did not only propose a revenue goal on the low end of expectations; it represented a new low, period. Bandying fancy terms like “equilibrium,” Recto, the chair of the Senate committee on ways and means, deceived both the administration he is allied with and the people he is supposed to serve with a rationalization that only the tobacco companies could love.

We can get a sharper sense of Recto’s deceptiveness by studying his well-written, even witty, sponsorship speech.

He begins with an unexpected and—on further reflection—even astonishing claim: “To every overture of a new tax, [the Senate’s] reply has never been of ratification but of restraint. The Senate’s role has always been to temper, not top, executive proposals.” He goes on to make the assumption behind this supposed role explicit: “while paying taxes may be the first duty of citizenship, ordering more of it should be Congress’ last.”

This all sounds vaguely right, but in fact we are being deceived. Recto does not refer to the middle ground between ratification and restraint, between tempering and topping. Where did all that go? In truth, this startling assertion is meant only to frame the issue in a particular way; even the supposed principle he offers is meant to introduce the absurd idea, which he later explicitly makes, that taxation is equivalent to, is as dangerous as, belongs to the same last-resort category of, the government’s power to wage war. Nonsense.

Recto then coins a new word, “intaxication,” to refer to the “historical addiction” of all governments, “whether ruled by despots or democrats,” to depend on so-called sin taxes. “The reason for this is simple: a government in need of money would always prefer a taxable vice, like drinking, to a tax-exempt virtue like staying sober.”

Again this sounds vaguely right, but in fact we are being deceived, because all the political science behind the use of government powers such as taxation to meet reasonable policy goals has been thrown out the car window—like a used cigarette. Indeed, Recto himself referred to the link between tax power and policy agenda early in his speech: “The measure… poses a deterrent that will keep people from being sick and will generate revenues that will treat them when they get sick.” But after he pays the policy lip service, Recto disregards it.

Perhaps the most startling of all of Recto’s pronouncements is his populist idea that the tobacco and other companies are “just collecting agents of the government” and that therefore the proposed new sin taxes will not really impact on the companies but on the companies’ customers. He paints a poignant portrait: “The ones who will ultimately bear the additional tax burden are ordinary folks, like the worker who likes to cap his day with a cocktail of rum and [Coke] or the call center employee who grabs a bottle of ice-cold beer before he hits the road.”

Nice touch, but selective to the point of dishonesty. He could also have sketched in other ordinary folks, like the bus driver who smokes a pack a day because of the stress of work, or the security guard who acquired the habit to stay awake on the job, or the traveling salesman for whom nicotine has become a way of life—the very people who, together, incur, by the government’s own estimate, P144 billion a year in smoking-related health care costs.

What is Recto doing with his people-not-companies-will-pay line? First, he is using images from the less-controversial public vice of drinking to camouflage the social and healthcare costs of smoking. Second, he is rejecting the administration policy to discourage people from smoking—surely, given all the evidence of smoking-related cancer, a reasonable policy goal. Third, he is reframing the issue as though companies are stupid or inflexible or helpless enough to pass on every single additional cost to their customers.

Recto could not stop himself from offering an argument from the extreme: “[I]f sin products indeed carry a misery index so high that it can’t be assuaged by high revenues, then the solution is not to tax them severely but to ban them completely.” Nice try, but if Recto thinks a total ban on tobacco products is politically feasible, let him be the first to cast the first bill. In the meantime, in the real world where 17.3 million Filipinos are classified as smokers, we must make do with a “severe” tax. It is a challenge Recto has failed.