• Taxes and high prices are killing us gently


    Tita C. Valderama

    WHILE Congress takes time debating the proposed reduction in the withholding tax on income, taxpayers are burdened with other taxes and increasing prices of goods and services.

    In Quezon City, for instance, real property owners have to suffer 39 to 131 percent increases in their tax payments this year following the city council’s approval and enactment of Ordinance 20CC-141, raising the fair market values of land, buildings and other structures in the city.

    The justification for the tax increase was the fact that the fair market values of real properties in the city were last adjusted 20 years ago, in December 1995, even if Republic Act 7160, or the Local Government Code of 1991, requires adjustment every three years.

    It is hoped that the additional monies—estimated at P700 million for 2017—that will be collected from the tax adjustment will return to the taxpayers in the form of improved infrastructure and efficient services, and not end up on the pockets of corrupt officials.

    Apart from the tax adjustment, prices of consumer products in groceries and even in the neighborhood talipapa have increased.

    And then we read reports that manufacturers are raising prices of basic commodities, as if these have not been increased before the Christmas season, supposedly as a consequence of the increases in oil prices.

    Trade Undersecretary Teodoro Pascua was reported as saying that producers of goods such as sardines, soap, and pasta would raise their prices this month due to the continued weakening of the peso against the US dollar.

    The Department of Trade and Industry (DTI) earlier authorized a 45-centavo increase in the price of a 50-gram pack of coffee and P1.15 to P1.90 for canned milk products.

    In the neighborhood talipapa, a bundle of pechay that used to cost P5 was being sold at P10.

    Add to these the inefficient services of telecommunications companies despite the exorbitant subscription rates they charge consumers, and that makes living in the Philippines a difficult struggle for ordinary people.

    And then you come across a report that the less income you earn, the more taxes you pay. The figures are quite disturbing.

    According to the Department of Finance (DoF), high-income earners shoulder only 28.4 percent of the tax burden, while those earning low have a share of 71.6 percent.

    The DoF observed a bigger gap of 27.9 percent between the taxes the high-income earners owe government and the amount actually collected from them, while the gap for those earning low was minimal at between 3.6 percent and 9.7 percent.

    Tax gap refers to the difference between total amounts of taxes owed to the government and the amount it actually receives or collects.

    Data from the National Tax Research Center (NTRC) show the tax gap among compensation income earners at around P30 billion, while the figure is at P67 billion for corporate income taxpayers.

    That is why Congress, which is dominated by rich members, should be more considerate in scrutinizing the tax proposals to make sure that the measures would genuinely shift the tax burden from low- and middle-income earners to high-income earners.

    In the proposals, the maximum rate of personal income tax will be reduced over time from the current 32 percent to 25 percent. Under the DOF’s proposal, people earning at least P5 million a year face higher taxes.

    The tax reform package includes a proposal to exempt those earning less than P250,000 from tax payment.

    Lawmakers should speed up approval of the bill that restructures the personal income tax system. This would barely catch up with the already increasing prices and the adjustment in other taxes.

    Please make sure that taxes and high prices of goods won’t kill us, and if they must, to do it gently.


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    1. Lea Hetherington on

      And Leila De Lima’s shabu business is killing the next Filipino generation very softly. It is really a good thing that Duterte was elected for President, otherwise, it would have been too late to save the country and its people.

    2. Actually, the government should practice austerity and not wasteful spending. The reason why they want to increase taxes and find other forms of taxes is to raise their salaries, bonuses and pensions. It is not really about spending for infrastructures and maintenance of our country. For example, in the city where I live, in the past, our garbage was collected once a week. Now, it is usually every two weeks and sometimes three weeks. Our street was neglected for almost a decade and my father died not seeing it repaved. It was finally paved last year. Then we also pay for other government services like yearly car registration, PRC ID renewal, renewal of driver’s licence etc and those actually a form of taxation. In other countries, a driver’s licence is for life. A professional licence is also for life. The same with car registration. The only time you lose the validity of your licences is when it is revoked due to a criminal act. Car registrations are “renewed” once you sell your car. Now, NSO certificates are required instead of photocopies and that is another expense for us. That is why a foreigner we know said that the Philippines is not poor with the kind of taxation and other government fees asked of us. It is corruption and unfair taxation that eat away at the income one has. Add inflation to that and we will become a failed state in the future once the middle class shrinks and joins the poor.