Poster boy of tax reform

DOF undersecretary Karl Kendrick Chua
—Photos by LEO M. SABANGAN II

It’s not easy peddling a product that will, for the most part, burden your market first before they see its full benefits in their lives—much like a laxative that needs to be endured before it can bring relief.

And the hard task goes to a lanky guy with pop star looks, recently thrust into the highly distrustful public arena, selling sugar taxes, among others.

The taxman is Department of Finance Undersecretary Karl Kendrick Chua, the coy 39-year-old who looks younger than his age, betrayed only by a few wisps of white hair he probably got in the grueling past year.

Chua, however, corrects the term: “I’m a tax advocate.”

And he has a lot of advocacy work to do to debunk allegations that the government is sugarcoating its words with the promise of decreasing income taxes but only to recover the savings through other means.

Chua believes the difficult job is still ahead after managing to persuade a large number at the House of Representatives to agree to the Tax Reform for Acceleration and Inclusion (TRAIN) bill in May.

“I realize that I’ll win this battle not only through reason, but also emotions, appeal and character,” the reluctant poster boy of taxes says in an interview with the Inquirer.

In the last few months since the Duterte administration set the TRAIN chugging, Chua has faced more than 200 lawmakers, explaining to the point of redundancy the nuances of lowering personal income taxes while adjusting the excise taxes on oil and sugar-sweetened drinks, among others.

He recalls one of the lawmakers telling him that she will vote for the bill since “I already looked pitiful.”

But that’s supposed to be the last word to describe this Ateneo management engineering graduate who later took his masters and PhD in economics at the University of the Philippines. He was the research assistant of the revered UP 11 (which includes veteran economists Solita Monsod, Felipe Medalla, Ben Diokno), whose work detailing an economy on the brink of falling saw full spreads in many newspapers in 2005. The work eventually led to amendments to the value-added tax (VAT) law.

The mentoring and experience he got made him a senior economist at the World Bank, a fulfilling and high-paying job he had to leave in July last year to join a fledgling administration that has become famous (and infamous) for its war on drugs.

Beyond the pity, it was the charm and intelligence of Chua that stirred many lawmakers. Several members of the House even “wanted to adopt him” as a son, an observer recalled.

Given the unwelcome idea of taxes, however, Chua has also earned his own critics, such as those on social media.

Chua notes strangers have called him names, including “extremely stupid.”

Chua has been accused of not knowing what’s happening at the grassroots level, having grown up with a silver spoon in his mouth. But Chua rose to become a respected economist due to his development work at the multilateral institution.

“I’ve been to Marawi, I’ve been to Tawi-Tawi [for weeks on end] … I lived in a poor community and even got tuberculosis and had to take medicines for six months,” he recalls.

Yet he liked what he did during those immersions, knowing full well the impact of his studies on the economy.

It’s also the development work that made him decide to join the government—one of the most difficult decisions in his life.

The husband and father

Chua had no connections in the administration. He only met Finance Secretary Carlos Dominguez a few times, like during the business-hailed Sulong Pilipinas event in Davao where the incoming Duterte family introduced their 10-point socioeconomic agenda.

“Since I’m in development work, I think it was inevitable that I will join government. You cannot be in the development work just advising … Everyone should try working in government,” he says.

And he was only given four days to decide—a decision that his wife and his young son have had to endure up to today. Yes, Chua is married.

His wife, Alanna, later reluctantly gave the go signal, but not without saying it was a stupid decision.

Though wed since 2009, the couple decided to only have a child later in the marriage.

Keid Ashby was barely a year old when Chua left his coveted World Bank regular position, basically putting aside a fresh tenure that could as well cover his boy’s education.

“My mom also said it was stupid, it’s the most stupid decision I’ve made. But my father was happy and he was proud. I talked to a lot of friends, too, and they felt it was a relevant thing to do and I was well equipped. [They just had some misgivings]. I just celebrated my 10 years in World Bank, and I just got my tenure,” he says.

Alanna says her fear was more of him getting his name ruined, a problem faced by many technocrats even with the best intentions at heart. Chua replies: “I just have to be super careful about what I say, what I sign, and that every policy we push has to be backed by data and principles.”

And there’s the issue of time. Chua celebrated his birthday last July 14—one he spent in an airplane at dawn coming from a seminar in Jakarta. He then proceeded to a meeting that took his entire morning, then caught up with sleep that afternoon.

“Before I accepted the post, I asked Secretary Dominguez if I could have a flexible time … It’s harder in practice, of course,” he says.

The day to day life of a Finance undersecretary goes like this: Chua leaves home around 6 a.m. and comes back past 10 p.m.

He tries, twice a week, to be home by 6 p.m. as a compromise to his wife.

Alanna says, “He never worked so hard in his life. He’s already a hard worker to begin with. He was a valedictorian in high school and then now, in government, he has never worked so hard.”

With the help of Ashby on July 15, or a day after his birthday, Chua finally got to blow the candles on his cake.

The dad

A large puzzle mat covers the entire living room of the couple’s 87-square-meter two-floor condo unit, where a precocious boy has just scattered his toys and books, trying to get the attention of his father with gleeful shrieks. Chua, who changed into office attire for the Saturday morning interview, manages to keep track of the guest-savvy Ashby while mouthing the benefits of taxes at the same time.

The father-and-son tandem–with a mother lurking behind ready to jump in and fix the chaos–is all part of the metaphor, a representative of what the tax reform aims to protect.

Ashby himself has become a poster boy of sorts. In the many presentations he has delivered, Chua has shown the picture of his son, explaining to the public that tax reform is not a burden, but an investment—an investment in the future of children via solid education and health systems.

Days after he was born, Ashby suffered from pneumonia and spent weeks in the hospital. Luckily, they had the money to bring him to the best hospital.

Other babies are not as fortunate, Chua says.

“This tax reform is for Ashby and for the many generations after him” is the oft-repeated line in his speeches.

It’s an empty promise to some, but nonetheless a mantra that has pushed Chua to keep on going no matter the sacrifice.

Taxes, taxes, more taxes

Chua’s is a highly technical job that needs strong research in terms of data and numbers, yet he recognizes it is also a marketing task—including appearing on TV host Boy Abunda’s current affairs program—to make sure that people will understand.

“Coming from the World Bank and my academic work, I’ve been doing tax-related work for 15 years, I realized that’s the easy part actually. The harder part is the marketing. First, generally, people say taxes are a burden. And two, it’s not like the budget or other reform programs that happen every now and then. Three, we’re trying to propose a tax reform when there’s no crisis,” he says.

Over the years, people have become accustomed to getting subsidies, he says. The VAT law has also lost its essence, with many sectors lobbying and getting exemptions.

“The proper way to do it is to give exemptions or subsidies through the budget, so you can target who will be the recipient, like the seniors, the PWD … Our Constitution doesn’t allow class legislation, you cannot say tax the rich but not the poor. That’s why we tax everything,” he says.

He says, however, that the plan was programmed in such a way that the rich can help in providing breathing room for the poor.

Chua says he also wants to make sure the tax reform program works even after the current administration leaves, so much so that the next government will not have the leeway to reverse the policies.

He says stakeholders have painstakingly developed the program for years. And this is the right opportunity for an introduction, when the leader has so much political clout and massive public appeal, he says.