No way out

According to Bureau of Internal Revenue commissioner Kim Henares, the proposal to remove the value-added tax on electricity will mean P30-billion less annually in funds for the government’s coffers, ergo P30-billion less in social and economic services, school buildings, farm-to-market roads, etc.

I have always maintained that the Filipino people should not be made to bear the burden of government’s efficiency in attracting foreign investments in going after big-time tax evaders and smugglers, and in raising new sources of funds that do not entail taxing the people.

Didnt we just scrap the pork barrel system? Less opportunity for stealing funds from the people means more money that can be spent for their needs.

If only the Bureau of Customs does its job of imposing the proper duties on everything that is brought into our territory, then that could easily make up for the reduced VAT collection.

The BIR has been coming up with newspaper ads listing down top money makers per industry and profession, and comparing it with their tax payments. If the correct income is declared and proper taxes are paid by these people, then P30 billion is peanuts.

Singapore’s personal income tax rate is from two to 20 percent (the latter imposed if the chargeable income is S$320,000 and more). The corporate income tax rate is a flat rate of 17 percent regardless of whether it is a local or foreign company.

For 2013, a personal tax rebate of up to a maximum of $1,500 is also granted as follows: 30 percent rebate for taxpayers below 60 years of age as at Dec. 31, 2012; 50 percent rebate for taxpayers 60 years of age and above as of the same date.

Singapore has no capital gains tax

Singapore follows a territorial basis of taxation. Companies and individuals are taxed mainly on Singapore sourced income. Foreign sourced income (branch profits, dividends, service income, etc.) will be taxed when it is remitted or deemed remitted into Singapore unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15 percent. (http://www.guidemesingapore.com/taxation/topics/singapore-tax-rates)

Meanwhile, Hongkong’s salary tax rate is two to 17 percent (two to 12 percent is imposed on the first $120,000 and 17 percent on the remainder). The tax rate for corporations is 16.5 percent. Property tax is 15 percent. There are no estate duties for those who died after 2006.

Offshore income, capital gains and dividends are not taxed in Hongkong.(https://globalconnections.hsbc.com/.../hk...)

I have decided to highlight Singapore and Hongkong because these are countries that allow their residents to retain a bigger portion of their income. Their governments believe that with more money in their pockets, these residents are able to have higher purchasing and spending power, thereby fuelling the economy.

Now let us take a look at the Philippines

For individuals earning purely compensation income as well as those engaged in business and practice of profession, the rate is five to 32 percent (for those earning over P500,000 a year, the rate is P125,000 plus 32 percent of the excess over P500,000).

The corporate tax rate is 30 percent

For capital gains tax which is generally paid by the seller, the rate is six percent of the selling price or the zonal value whichever is higher. The buyer pays for the transfer tax which is 0.5 percent of the selling price, or the zonal value or market value, whichever is higher.

Estate tax rate is a progressive rate. If the net estate is over P500,000 but not more than P2 million, the rate is P15,000 plus eight percent of the excess over P500,000. If the net estate does not exceed P200,000, it is exempt from estate tax. If the value is more than P10 million, then the rate is P1.215 million plus 20 percent of the excess over P10 million.

The Philippines follows the progressive system of taxation wherein the wealthy is supposed to be taxed more than the less wealthy.

Unfortunately, our system of taxation punishes the middle income taxpayer who is taxed at rates closer to the wealthy.

It is not only income taxes that Filipinos suffer. Because everything is taxed, including association dues, the cost of living becomes high. There is VAT on everything, which raises prices of goods and services.

But do people get to see the fruits of their labor? All they read in the papers are instances of graft and corruption in government. A publicly funded project, for instance, the computerization project of one agency, has such a huge cost because it is padded, with 30 percent going to the pockets of favored individuals.

Roads are substandard because if you make them of high standard it will take many, many years before they need to be repaired, then those who decide which private contractor gets the repair project will no longer have funds to finance their lavish lifestyle and to boost their election campaign kitty.

In one province where the governor, congressmen, and mayors are family, while it is true that the capital town has improved a lot since they snatched power from another political dynasty, it is also true that their family is well-compensated. I heard that the patriarch from the onset bought into an existing construction company based in the province. Most big-ticket public works projects go to this contractor and of course, the dummy owner gets a part of the loot for him to keep his mouth shut.

It is true that our legislators lost their PDAF and their commissions. Expect positions for governor and mayor to be more hotly contested beginning 2016 and less people interested in running for Congress.

The problem of the Philippines is too deeply rooted to be solved by a President who may be sincere in putting an end to graft and corruption but who does not have the proper action plan to attain his objectives.

In the meantime, the Filipino people do not see how his present actions translate to food on the table, to roofs over their heads, to affordable education, to the basic things that a person needs to have the dignity to be called a human being.

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