Want civilization? Pay taxes: Sachs tells Asia

MANILA, Philippines – Asia, including the Philippines, will need to raise its tax collections if it wants to achieve higher economic growth, world-renowned economist Jeffrey Sachs said during an Asian Development Bank (ADB) governors’ seminar on Thursday, May 3.

“You can’t spend what you don’t have,” Sachs said. “You need to spend enough for health for the poor, education, infrastructure, science and technology. The U.S. doesn’t do this any more. That is why we have a chronic fiscal crisis.”

Sachs was one of the bets for the lead World Bank post this year, but he withdrew his nomination in support of U.S. nominee and now World Bank president Jim Yong Kim.

He said taxes are the price one pays for civilization. He noted that every “decent” society requires public spending, which means taxes.

“If you want civilization you have to pay for it.”

Sachs’ statements were music to the ears of the Philippine finance chief, who has been pushing for higher local tax collections to reduce the budget deficit and fund vital social services.

“He caught me off guard there but I would have said amen,” Finance Secretary Cesar Purisima said.

“Paying for good government is something that applies to all countries including the Philippines. That’s why one of our thrusts in the Aquino administration is to focus on fiscal sustainability,” he added.

Purisima said the government is working on two bills to increase taxes — the fiscal incentives rationalization bill, which would tighten what incentives can be offered to enterprises, and the sin tax bill, which would increase taxes on alcohol and tobacco products.

Not just Asia

Sachs, meanwhile, said that not only Asia, but also the U.S. will have to raise taxes to better provide for social services.

Sachs was deeply critical of the current U.S. tax regime. He said, “The United states is under taxed but calls itself over taxed — this is a fundamental problem.”

He traced America’s aversion to paying taxes to its early founding history revolting against British taxes. 

“Tax black holes” were his name for the offshore bank accounts that corporations and the wealthy create in the Cayman Islands.

“This is pure constructed massive tax evasion. We have created it politically and consciously…. It’s a race to the bottom. It’s scandal that is legalized.” – Rappler.com