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Reader Reynaldo de Guzman e-mailed this writer to say
that “I could not disagree more with your assertion that “Aside
from the overseas Filipino workers, the informal sector is the real
savior of the Philippine economy and they who work in this sector
deserve all the support they can get from this government.”
He also said that “As these
unlicensed, unregulated informals increase in number, they have an
economic effect of keeping legitimate businesses from growing and
employing more persons. In some cases, competition from these
informals actually put legitimate businesses “out of business”,
a critical problem since “those legitimate small businesses are
places where people can find employment.”
As his parting shot, he stressed
that he “cannot imagine that we want a country full of informal
businesses that pay no taxes to replace legitimate licensed business
tax paying businesses. Where would our cities and towns get tax
revenue from to support government programs? There is certainly no
tax revenue from these informals, and definitely the individuals who
operate the informal enterprises surely do not pay the correct
income taxes.”
I must have committed a boo-boo
if I had misled readers into thinking that I prefer the informal
sector to the formal sector that pays taxes and are more regulated.
My fault, really, is that I haven’t taken time to touch on making
a distinction between formal and informal sector, which is really in
order, before I touched on the informal sector.
Business, the formal sector of
the economy, is a heavily-regulated one, and for good reason.
Regardless of all the resistance and criticisms of laissez faire
advocates, business delves in many things that concern practically
every aspect of our lives, as seen through the products that we buy,
based on a presumably well-thought of valuation of goods, services
and products that the sector has chosen to provide the public.
The residual effects of business
operations can determine if we are going to have a good, peaceful
environment. Hence, government and the public can rightfully
determine where business should locate itself, where the community
can be freed of threats arising from security, pollution and
environmental factors, among others, that affect the enterprise.
The government and the public can
also define if a business concern is a socially uplifting one, or if
its products are genuinely needed, affirming values that bind
society and institutions, and perhaps introducing innovations that
build up new values and ways of looking at things.
Could you imagine what would
happen if a media enterprise that only produces pornography
(regardless of whether the output is soft or hard-core pornography),
or an entertainment club (regardless of whether it peddles young
bodies or mature women above age 18), is allowed to operate, for
instance?
Business has always criticized
government that sees it only as a source of revenue, rather than a
genuine socioeconomic resource that can lead in innovation of goods,
products, services and technologies, among others. This is social
entrepreneurship in its purest form, and how development workers
look at the ideal role of business.
At the same time, development
workers pray that business will look kindly at the value of
corporate social responsibility, since many development projects
have actually stemmed from corporate decisions to invest in social
goods, to give back to society part of the profits that impelled
business operations and fueled innovation.
Cynics look at business in terms
of government revenues or taxes that can fund development through
government channels. Yet, many development workers point out that
there is less corruption and fewer leakages of funds and resources
in business, and the sector is more effective and efficient when it
so chooses to fund development, perhaps directly.
At its most rational level,
business has a passion for productivity, judicious use of resources,
and avoidance of all kinds of digressions. It normally makes sure
that monies go to intended targets at the specified hour and time,
avoiding any form of leakage or redirection of these precious
valuable things from the targeted objectives (in this case, the
poor) to corrupt thieves hankering for any value to fatten their
private pockets.
Unfortunately, taxes are seen as
the business sector’s most strategic contribution to the economy.
It cannot be this case if as much as 40 percent of all government
revenue collected from taxes and tariffs are leaked into private
pockets, diverted to relatively less productive projects (such as
favoring the construction of waiting sheds emblazoned with the
donor’s name over capital assistance for the informal sector, the
favorite of many politicians in the rural areas, or when funds are
used for parties and soirees sponsored for political purposes).
Social objectives are actually
better served if business liberates itself from the paradigm of pure
profit and moves into positive social action, as seen through social
advocacies, programs and projects that benefit the poor.
opinion@manilatimes.net
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