Tax Burden <Off Topic>
BA Forum Moderator
affected by the tax measures being implemented. in the article below,
randy david, i believe, presents a balanced view on the subject.
is a fiscal crisis looming ahead still? well, we know that prior to the
asian financial crisis, we implemented the e-vat & the peso appreciated
(and the dollars left, just as fast as it came then).
imho, it's just sad... that honest, hardworking people will once again
be taking the brunt. and, it's even sadder to think that the same
honest, hardworking people may again be taking the blow if the fiscal
crisis ends up in a collapse.
so, i say, we pray.
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Public Lives : Distributing the tax burden
Posted 00:27am (Mla time) Jan 30, 2005
By Randy David
Inquirer News Service
Editor's Note: Published on page A13 of the January 30, 2005 issue of
the Philippine Daily Inquirer
IN GENERAL, no tax is ever acceptable to a people. This is even more so
if the government that collects it is perceived to be useless,
illegitimate and corrupt. A good government is one that is able to show
the public that the taxes it demands are collected justly-i.e.,
according to one's earnings and assets-and entirely spent for the
common good.
Herein lies the biggest problem of the present government. Most
Filipinos believe that taxes in our society are collected more on the
basis of expediency rather than on justice. That the government has
been relying more on consumption taxes than on property and income
taxes. That it has zeroed in more on the fixed-income earners with no
breathing space than on those with variable incomes, like freelance
professionals and businesses. The public feels that those who bear the
brunt of taxation are not the rich who have unlimited ways of hiding
their true incomes, but the poor and lower middle classes, like the
ordinary government employees, who have single and easily traceable
incomes.
On top of this, citizens do not see their taxes being spent to improve
social services but only to line the pockets of corrupt bureaucrats and
to pay for government debts accumulated by bad leaders.
People may know little of the superiority of the value-added tax (VAT)
over the ordinary sales tax or excise tax. But they know that whichever
form of tax is collected, it will always be passed on to them as final
consumers. Therefore they believe that any increase in the VAT or any
expansion in its coverage will always be, in the last analysis, an
additional burden that they cannot hope to pass on to anyone but their
families.
They want the government to first plug the drain in public funds caused
by massive corruption. They want the government to go after the large
tax-evaders, to tax the wealthy instead of the poor by focusing on
large incomes and lavish consumption, rather than on meager incomes and
basic needs.
In view of this, it may make very little sense to warn the Filipino
public that they face the consequences of an impending economic
collapse if the fiscal deficit is not immediately solved. Many think
they have nothing further to lose in the event of an economic crisis.
They don't see themselves as meaningful stakeholders in the present
system. Not a few may even believe that a crisis is what the country
probably needs to bring the national leadership to its senses.
The point is you cannot expect the public to pay for the debts of
unaccountable government corporations, which the government has
indiscriminately assumed year after year. The government must give a
full accounting of these obligations, and assign responsibility, before
it should even begin to pay a single centavo of public money to service
them. Only then can it begin to allocate the burden of paying these
obligations. It can sell the remaining assets of these GOCCs, fire
their overpaid executives, and settle their debts once and for all; or
it can hold on to them and continue to service their debts. In either
case, we all end up paying the costs in the form of higher tariff or
higher taxes. I believe we deserve to know at least whom to curse for
this state of affairs.
I am certain that, in the final analysis, the present government will
choose the path of privatization. This relieves the political
leadership of the heavy political cost of imposing new taxes to cover
recurring debt service. It may also restore to the national budget the
flexibility it needs to address the requirements of a growing
population. But what a pity that government-run firms in our country
should always be known as inefficient and graft-ridden. In other
societies, they do not have that stigma, and they do function well as
the public's best defense against the abuses of oligopolies. As
important, in the hands of a developmental state with a clear vision,
such public firms can become the spearhead of a sustainable and
equitable form of development.
I believe that the whole tax debate has focused too much on the need to
raise additional revenue immediately to avert a looming crisis, and too
little on the need to streamline mechanisms so that existing tax laws
are fully implemented and various forms of leakage in the revenue
system are plugged. Just to give an example: rental from high-end
accommodations is probably one of the most under-reported earnings in
this country. One can say the same thing for the incomes of top
practitioners in the legal, medical and entertainment fields. So much
tax-evasion takes place at the upper levels of our society that it has
become almost immoral to take every centavo of income and consumption
tax from the majority who do not earn enough, for no better reason than
because it is easy.
For the last five years, public school teachers have been demanding an
increase in their monthly salaries. Government says it understands
their situation but that it has no money to pay the increase they are
asking for. I say, if you cannot increase their pay, stop withholding
the 10-percent income tax from their salaries until you can give them
the level of remuneration they deserve. Why should tax privileges be
the prerogative of the independent power producers?
Only a thin line separates taxation from exploitation, and our
government seems bent on doing everything to erase it.
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