Luis Rubio
All governments end up encountering pockets of resistance. Some are very ambitious and try to change many components of the status quo, while others simply confront groups that, with reason or without, have interests –and on occasion privileges- to protect. The fact is that resistance to change, when not in opposition to the latter, is a constant of human nature. The government attempts to advance its project and those who would see themselves affected by it try to avoid losing out. Nothing more legitimate than these differences in the life of a country. What we have experienced during these months fraught with effecting a series of reforms is that no change is simple, but that opposition to change is always robust and, on occasion, devastating. And worse yet when the proposed change is only just consistent. What I have observed brought to mind an affirmation by Kissinger who, on referring to another theme, once suggested that it was a pity that both sides couldn’t lose. The question is how to exit the labyrinth.
Nothing better illustrates the futility of the confrontation between those attempting to reform and those resisting it than the issue of taxes. Here we have at our disposal an exceptional window to analyze the political dynamics characterizing the country, the seriousness of the governmental proposal and the dimensions of how the diverse groups of the society will potentially be affected.
I start with the principle that the country requires basic reforms because the status quo does not lead to economic development, to prosperity or to the general well-being. Our paradox -not exclusive to Mexico- is that everyone wants something better but no one’s willing to change what there is. From this perspective, the need to carry out reforms is evident.
Nearly all of the reforms that the government has come to advance have been divided into two halves: a constitutional amendment that establishes a new paradigm for the sector or activity and subsequently the implementing legislation to make the new model effective. Unfortunately, in many of the reforms that have been approved as well as those in the process a spirit of restoration more than a spirit of transformation is prominent. The rhetoric says transformation, development and progress but the text of what is legislated says control and centralization of power. It is possible that these are the eminently suitable means by which the institutional scaffolding could be constructed that could possibly break with the accumulated havoc, but an attempt continues to be obvious to reconstruct the old PRI system, as if its results were worthy of tribute or, more importantly, as if a return were possible to a distant past that entertains no similarity with the globalization, nanosecond communication and social participation that is today’s reality.
I return to the case of taxes because it is revealing: the government appears to have analyzed all of the spaces in which a tax payment may lurk that is less than expected or due for payment and has presented a phalanx of modifications that affects (nearly) everyone. Instead of choosing its battles, it has opened fronts on all sides. Some of these fronts -like the VAT on tuitions- were clearly designed to be thrown out by the opposition, while plying them with flags and goodies in exchange for more substantive modifications. It’s not a novel tactic and is one that has always been of service in a system so given to imposition and verbal more than substantive confrontation.
Many of those who resist have reasonable arguments that the government (and the pact-ers) have not taken care to analyze and evaluate. For example, I don’t know whether things like the accelerated depreciation of a certain type of investment or fiscal consolidation are good or bad, but I have no doubt that this is about public policy instruments conceived to induce or advance certain types of projects and objectives, which is why they exist the world over. It may be desirable to eliminate these mechanisms, but there would have to be an understanding in place of what would stop happening as a consequence. Of course this would increase tax collection, but we would have to ask ourselves what would there stop being.
Contrariwise, it seems meritorious to me to eliminate (some) special tax regimes that are nothing other than privileges for the political regime’s pet coteries. But, at the same time, it’s paradoxical that the rhetoric accompanying the fiscal reform proposal advocates driving formalization of the informal economy by making it more complex, thus not as easy, to comply with fiscal obligations. The same can be said, on the spending side, of the discretionary powers that the governors will retain. Paradoxes churned up by life when a bureaucratic perspective of things is adopted.
At heart, perhaps the greatest weakness of the governmental proposal lies less in its wanting to raise taxes than in the choppy logic of its proposition. A level playing field, as the saying goes, would be easy to defend. What is indefensible about the bill presented by the Executive Branch is the number of exceptions that it generates: instead of eliminating these, it exchanges some for others. The value added tax case is emblematic: for a tax with a cascading effect like the VAT to satisfy the objective of obliging all potential taxpayers in a chain of buyers and sellers to render to Caesar, it must be applied across the board. I am not unaware of the social effects of such an action in this sense, but it appears to me that one should think in terms of dealing with these consequences rather than creating or maintaining exceptions. When the regime is applied only partially, it becomes impossible to defend exceptional cases, in those proposing to make the tax happen as well as in those exempt from it. Both are a farce not lacking in political and clientele-ridden overtones.
The government’s reformist spirit is commendable because it is imperative to reform political and economic structures that in the current scenario do not lead to development. But these reforms must effectively make a clean break with the impediments; to date there’s no evidence that the content of the reforms leads to a momentous change but it is clear that it has achieved acquiring oppositional elements from all quarters, as well as emboldening dissident groups who see in the government’s clientele spirit opportunities to make their fortunes and spaces of power (i.e. the CNTE). The government has gotten itself caught in a labyrinth that will oblige it to define itself and modify its priorities. The recent hurricanes will play a key role because, in addition to causing inexpressible harm, they will give rise to political demands that were not anticipated. Once the calm after the storm returns we’ll know what this government is really made of.
@lrubiof