The ProGRESS Bill: Populist Bait‑and‑Switch

 

 

Governments have encouraged magical thinking among citizens, encouraging them to believe that policymakers can shield them from these events. Subsidies, transfers and price control are electorally popular, but they do not address the core problems—Satyajit Das 

The ProGRESS Bill: Populist Bait‑and‑Switch 

A tax bill dressed as redistribution, designed as election positioning. 

GMA News: The Department of Finance (DOF) is proposing a new comprehensive tax reform package to legislate President Ferdinand Marcos Jr.’s tax relief promises and to offset anticipated revenue losses by raising taxes on vices, single-use plastics, and the introduction of a “wealth tax” targeting luxury vehicles and items, private jets, and other non-essential goods. 

The DOF's ProGRESS bill formalizes what our Stagflation Part 13 flagged only in passing as one of two new SONA liabilities: the Php 350,000 income-tax exemption ceiling is not free. 

The seen half of that ledger is the less popular half: a higher tax-free threshold, a 12-month MCIT holiday for micro and small enterprises (MSME). 

The unseen half is where the offset actually lives — an expanded sugary-drinks tax (Php 296.97 billion, the single largest line item), updated road-user fees (Php 89.58 billion), a new plastics excise (Php 52.19 billion), higher vape/alcohol taxes (Php 64.32 billion), and a "wealth tax" on luxury vehicles and private jets (Php 15.64 billion, the smallest line item by a wide margin). 

Despite dominating the bill's public narrative, the wealth tax contributes barely 3% of the package's projected new revenue. The overwhelming majority comes instead from broad-based consumption taxes. 

DOF's ProGRESS bill will be financed — the DOF's own numbers show Php 518.71 billion in new revenue against Php 326.92 billion in relief between 2027 and 2030, netting Php 191.77 billion. 

Four problems are worth naming before this gets waved through as a fiscally responsible bargain. 

First, the relief is temporary and the extraction is permanent. The MCIT exemption for MSMEs runs twelve months; the sugary-drinks, plastics, and vape excises do not sunset. A bill that trades a one-year holiday for permanent new consumption taxes isn't really offsetting anything — it's front-loading the popular part and back-loading the durable revenue base. 

Second, the Php 350,000 threshold repeats TRAIN's design flaw rather than correcting it.

TRAIN's own Php 250,000 exemption was a fixed nominal figure, never indexed to inflation while SWS's self-rated poverty series (SRP) exposes and traces exactly the trajectory that design flaw predicts: SRP bottomed out near TRAIN's 2017 passage, then climbed back through the 2022 global inflation wave and again through 2023–2026, re-converging on 52% in March 2026, almost back at pre-reform levels, over a period when the threshold itself never moved. 

That's not a one-off shock working itself out; it's a nominal exemption acting as a wasting asset against inflation. The mechanism matters more than the timing: each inflation wave — externally triggered in 2018 and 2022, self-inflicted in 2026 — claws back the relief's real value until self-rated poverty drifts back toward baseline. 

Raising the threshold to Php 350,000 now doesn't fix that design; it resets the clock, and resets it into a fiscal environment this series has already shown is more inflation-prone than 2018's, because the inflation itself is now an output of deficit financing rather than an external commodity shock waiting to pass. 

Third, the "wealth tax" targets the most visible and most mobile expressions of wealth — a luxury car, a jet — rather than the underlying capital stock. Both are easy to defer, relocate, or register elsewhere; neither captures the concentrated equity sitting in the regulated sectors this series has already mapped (banking, power, tollways) where ownership is entrenched and politically insulated rather than liquid and mobile. 

Durable economic rents are generated by ownership of productive capital, not by ownership of luxury consumption goods. Taxing the latter therefore says more about the politics of visibility than about the distribution of economic power. 

A tax that hits the visibly rich while leaving the politically connected rich untouched isn't redistribution. It's oligarchy protecting itself — narrowing who's allowed to become rich while leaving who's already entrenched untouched. 

And treating demand as inelastic here repeats the same error twice over: raise the sugary-drinks or alcohol tax high enough and consumption doesn't vanish, it migrates to the cheapest available substitute. 

Alcohol already demonstrates the broader principle. Raise excise taxes far enough and demand doesn't simply disappear; part of it migrates toward cheaper, untaxed or illicit substitutes. 

The Philippines already has several case studies — lambanog contaminated with methanol, deliberately spiked because it closes the price gap between registered product and untaxed denatured alcohol, has killed dozens in recurring outbreaks since 2018. 

Sugary drinks need not follow the same pathway into illegality, but they face the same economic constraint: higher excises encourage substitution into cheaper legal alternatives, shrinking the tax base more than static revenue projections assume. 

A Php 296.97 billion sugary-drinks projection and steeper alcohol excises are therefore betting the same proposition: that higher tax rates will leave the revenue base largely intact. They won't. Consumers substitute—toward cheaper legal products in some markets and untaxed or illicit ones in others. 

Fourth, timing makes the politics plain. Relief is immediate — a one‑year MSME holiday, a threshold bump — while extraction is permanent: new excises, unindexed thresholds, compounding after 2028. 

The costly reforms in debt‑ratcheting sectors stay untouched; the cheap optics of “soak the rich” branding get front‑loaded. This isn’t revenue design, it’s election positioning. 

Set against Part 13's fiscal picture — a record Php 786.8 billion first-half deficit, interest payments at their highest share of spending since 2009 — a Php 191.77 billion net gain stretched over four years reads more like narrative‑driven revenue grabbing.  

Sin and luxury goods sell themselves as villains.  

Broad-based reform of the sectors actually driving the debt-service ratchet does not. 

Quote of the Day: Every Tax Reform is a Push for Higher Taxes

Every tax reform in my lifetime has actually been a push for higher taxes in one form or another. And there are still other ways to raise taxes besides raising taxes, reducing deductions, capping deductions, and closing loopholes. You can raise tariffs, increase user fees, enact quotas, inflate the money supply, or outright confiscate people’s property through police state tactics. All these methods suck resources from the private economy into the government.

The goal of every tax reform is to do this in the sneakiest way possible.

The media are no help in clarifying language. When a politician proposes a cut in taxes, the reporter imagines that he or she is a clever and hard-hitting journalist by shooting back: “How are you go to pay for that?” Nonsense. If the thief decides not to take your wallet, he shouldn’t be asked how he is going to pay for his failure to steal.

Of course, all of this is beside the point, really. The core problem is spending. If the government didn’t spend money, it wouldn’t need to tax anyone. The only real way to lower taxes over the long run is to cut spending, but again, this is not going to happen. Even those who talk about spending cuts are really talking about cutting the rate of increase in spending over five or 10 years in budget projections that have never panned out even one time in the history of the universe.

This is from Jeffrey Tucker publisher and executive editor at the Laissez Faire Books.

Let me add another 'sneaky' or furtive way to impose taxes has been to use pseudo-righteousness or moral uprightness as cover for government spending (e.g. Sin Taxes) 

And another thing, politicians often mistake treating tax revenues as a constant function of tax rates, i.e. increasing tax rates equals increase in tax revenues. They forget that people respond to incentives, such that higher tax rates may drive economic activities underground. This means political goals will not be met because of the unintended consequences from ignoring human action and pretentious wisdom.