Just recently, I chanced upon a very interesting radio interview by dzMM’s Gerry Baja with businessman Johnny Chang as to how our current tax regime and government’s unwise spending priorities weigh down heavily on our countrymen.
The Philippines probably has the highest income tax rate and levies the most number of taxes in the region, with income taxes at 32 percent, corporate taxes at 30 percent, and the value added tax which is now imposed even on organizations as well as condominium dues, at 12 percent.
Singapore on the other hand, imposes a 17 percent corporate tax rate with exemptions and incentives for smaller businesses. It has become a popular tax haven for the wealthy due to the low tax rate on personal income, a full tax exemption on income that is generated outside of Singapore, and 69 double taxation treaties that can minimize both withholding tax and capital gains tax.
Meanwhile, both corporate and personal tax rates of Hong Kong are considered as one of the lowest in the world. Individuals are taxed at progressive rates on their net chargeable income from between two to 17 percent; or at a standard rate of 15 percent on net income, whichever is lower.
There are no capital gains tax, dividend tax and inheritance tax in Hong Kong. Individuals are taxed only on income that has been “earned in Hong Kongâ€unlike in the Philippines where taxes follow the individual.
The Philippines follows the lifeblood theory, meaning, government basically derives its income via taxes imposed on its people to finance the provision of services, building of infrastructure, etc. As pointed out by Chang during the interview, government wants to pump prime the economy via public spending unlike Hong Kong and Singapore which believe that it is the people who should pumpprime the economy, and not the government. Because of the low tax rates, Singapore and Hong Kong citizens and residents have more disposable income and therefore spend more and invest more. Also because of the low rates of business taxes, these two countries are able to attract more foreign investments.
So the Philippines pump primes the economy via public spending. Unfortunately, it has wrong priorities when it comes to spending.
Just take a look at the PDAF of our legislators which comes from taxpayers’ money and how Janet Napoles and her cohorts have spent it to finance their outrageous lifestyles.
Our overtaxed citizens were given a P10 wage hike which is not even enough to cover the increase in electricity and fuel rates as well as the jacked up rice prices.
Our government’s short-sightedness can best be illustrated by the recent decision of the Metropolitan Waterworks and Sewerage System (MWSS) to reduce the water rates being charged by water concessionaires Maynilad and Manila Water.
Manila Water was ordered to do a negative adjustment of 29.47 percent for its 2012 basic water charge of P24.57 per cubic meter. The adjustment will be implemented in five equal tranches of -5.894 percent per charging year. This translates to a reduction of P7.24 for the next five years. Meanwhile, MWSS reduced Maynilad’s 2012 average basic water charge by 4.82 percent or P1.46 per cubic meter, translating to a 29 centavo per cubic meter reduction in the basic water charge every year for the next five years.
Consumers of Maynilad and Manila Water will hardly feel whatever positive effects MWSS is expecting from the reduced rates, but water consumers will definitely feel the effect if and when the two concessionaires decide to put on hold their multi-billion peso investment plans because of government’s refusal to allow them to recover their investments as committed by the MWSS in its concession agreements with the two private groups.
Both companies will challenge the MWSS decision. Maynilad and Manila Water said they will initiate arbitration proceedings to dispute the decision and to settle the tariff rebasing issues promptly.
In the meantime, Maynilad will review its current service levels and future infrastructure investments to determine how it can continue providing services to the West Zone without compromising the long-term financial stability of the company.
Manila Water (MWC) on the other hand emphasized that MWSS arrived at this rate determination after cutting away significant programs for building and maintaining the water and wastewater systems in the East Zone, and “because of this, our ability to fulfill our service obligations to our customers will be severely compromised and impaired.â€
Observers say that this is another palliative measure resorted to by our government to focus its people’s attention away from the public sector’s inefficiency.
President Aquino may not realize it yet, but the MWSS has just declared the President’s banner public-private partnership (PPP) program dead. No businessman in his right mind would now dare partner with government because the MWSS just showed that government’s commitment is not worth anything.
First of all, if our government had been spending our money wisely, would it have to rely on the private sector to provide basic infrastructure such as water, power, electricity, roads, among others? Would it need to resort to privatizing government hospitals had government decided that the people’s money is best spent on basic services?
Getting the most out of your driving
True, there are now a lot of mobile applications to choose from to allow motorists to plan and map their road trips. But what if there is one that will go the extra mile - let you plan your pit stops and even set reminders for your vehicle maintenance services and even your car registration and insurance renewal schedules? Wouldn’t that make driving and owning a vehicle simpler and more convenient?
Shell, a global leader in power, energy, and gas technology, has designed the Shell Motorist App – a new tool that offers motorists a more convenient driving experience with features that will ease any kind of trip. It is available for iOS and Android smartphones.
Through this app, motorists will not only be able to manage their trips better with the Shell station locator and route planner which will allow users to look for easier routes, and plan proper pit stops for long drives at Shell Stations at the most convenient locations. It also highlights current promotions and offers in the Shell stations and allows users to set reminders for vehicle maintenance service schedules, renewal of car registration and even insurance payments.
Shell is working to meet increasing energy demand and supply challenges by delivering smarter products and cleaner energy, smarter infrastructure, promoting smarter use, and by developing new energy sources while addressing the impact on the environment, through cleaner burning-natural gas and advanced fuels and lubricants technology. It advocates for the use of energy more efficiently as the simplest and most cost-effective way to reduce emissions and mitigate climate change through driver education, fuel efficient driving behavior, and smarter mobility collaboration and strategic partnerships to fuel the country’s progress.
The Shell Motorist app is just one of its many innovative methods in enjoining consumers and businesses to use energy better, to do more with less, and make energy conservation a way of life.
Biz bits
Probably taking cue from her counterpart in the Customs bureau, Bureau of Internal Revenue (BIR) commissioner Kim Henares has ordered a rigodon of 123 revenue district officers (RDOs) and 19 other key personnel of the bureau. Revenue Travel Assignment Order no. 38-2013, issued Sept. 11, 2013 covered all 123 RDOs including areas as far as Sultan Kudarat. While most involved lateral transfers, meaning transferring an RDO of one district to another district, there were also RDOs who have been “put in the freezer†when they were designated instead as members, core expert team, project management and implementation service (PMIS), a position which is based in the central office in Quezon City and of the same rank or item as an RDO but does not have the same powers and privileges as the latter.
Some members of the core expert team, meanwhile, were named RDOs. Insiders explained that this is not necessarily a promotion since this core group experts may have previously been RDOs but have been put in the freezer by Henares before.
There are also technical assistants of the taxpayer assistance service who have been named RDO, a move which is a “promotion†for some but may also involve just returning an RDO who had been “demoted†back to his previous post. It is not so clear though whether some reassignments are promotions or demotions. Like when the chief of the large taxpayers collection and enforcement division (large taxpayers service) was named RDO of Binondo; or when an assistant RDO is named OIC, RDO; or when the RDO of South Makati is reassigned as RDO of East Davao City.
The reassignments may have come at an inopportune time with Christmas about three months’ away. Our sources say that ever since Henares assumed the top BIR post, there have been less and less gifts being delivered at the central office because she makes it a point to inspect the gifts and find out who the givers and recipients are.
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