What follows is a discussion paper only on how to go about
setting-up a regime of taxation; it is not a complete set-up. The aim is to
construct a system that will be equitable and fair for everyone. To do this, we
begin with the view of the ship of state being a national institution made of
two sectors: The private and the public; the latter being called government
some of the time.
The percentage of social and economic activities conducted
by each sector depends on the political inclination of the current ruling
class. The determining factor here varies from being the extreme conservatives
who favor a heavy participation by the private sector, to the extreme liberals
who favor a heavy participation by the public sector. And there are moderates
on both sides who favor a mix between the two extremes. The nation's business
is also conducted simultaneously on three levels. They are: operation,
obligation and investment. Each of these happens in the enterprises of the
private sector, and happens in the departments of the public sector.
First, the operation part. It comprises the bureaucracies in
the private and the public sectors where they help in the running of the
institutions and the governance of the nation. In the private sector, they also
help in the protection of the company against corruption, sabotage and
industrial espionage. These would be the personnel from the CEO down to the
floor sweeper. In the public sector, they also help in the protection of the
nation against foreign and domestic enemies. These would be the elected and
non-elected officials from the heads of state down to the military cadets.
Second, the obligation part. It includes the private and
public institutions that produce the bulk of the goods and services making up
the Gross Domestic Product (GDP) of the nation. In the private sector, it also
includes the institutions that look after the health and safety of the workers
who are employed, and ensures their well being after retirement. In the public
sector, it includes the departments that distribute the entitlements to those
who have contributed to them, and those who earned them by right of
citizenship.
Third, the investment part. These would be the schools and
the training centers at all levels that benefit the young and the not so young.
They are also the long term civil infrastructures that will benefit them when
they have grown. Such institutions and their personnel are to be found both in
the private and public sectors. They are the teachers, educators and trainers
as well as their assistants and helpers. These investment institutions also
comprise the public sector departments that are indirectly associated with
those activities.
How to decide what portion of the GDP should be allocated to
each of the three parts making up the nation's business? Well, when it comes to
operations, it has been established through experience that they run
efficiently when 20 percent of the receipts are used to run them. The receipts
in this case being the GDP, a fifth of it can go to run the operations in the
private and public sectors. The remaining 80 percent should be split 40 percent
each to the obligation part and the investment part of the economy. This means
the needs of the middle class and the entitlements to seniors should take up 40
percent of the GDP. As to the young, their immediate needs in terms of
schooling and training as well as their future needs in terms of
infrastructures should take up the remaining 40 percent of the GDP.
The question now is this: How much activities should be done
by the government, and how much by the private sector? As mentioned earlier
this will depend on the political inclination of the current ruling class. But
because a great deal of politics and dogma contribute to the making of these
decisions, it would be a good idea to have some kind of reference to go by.
The truth is that there is not a number cast in stone that
would constitute an ideal percentage. At any given time in the development of
an economy, certain projects will be done better by the government and others
done better by the private sector. Look, for example, to the exploration of
space. No one in the past half century could have done it but NASA which is a
government institution. But now, the baton has been passed to the private
sector.