Here we go again, as the New Year begins, a new tropical storm “AGATON” is in the Philippines. But we also have a different kind of “storm” , and that is ” TAX-MAN” , better known as, the ” Strong Surge and ‘ tilde ‘ wave for more Taxes the we need to pay to the government.
I am aware that TAXES are good and necessary. Taxes, is essential for the State, and the Republic. All Nations, in order to perform well, in serving properly Society, the People and its Citizens , demands say, for 2014, a Budget of about 2.265 TRILLION.. this is justified so that the Philippine Government can do its Job efficiently.Therefore, TAXES are required to fuel the National and Local Governments FISCAL and Monetary needs.
But, its unfortunate, to say the least, that much of our ” Trillions” end up in the wrong hands, pockets and ” hidden treasures” or ” cash in bath tabs”. It is indeed sad , that we are a Nation that is ” bleeding” in funds , due to Graft and Corruption. That is why, we the Tax Payers, are getting ” short changed” . Meaning, there is no Clear, Accurate, Transparency and Accountability, as to where our taxes go. The best test is that we, the citizens that are paying the Taxes, but do not receive the just minimum on Social Services and Welfare.
One of the worst crimes, would be to mis-use , abuse, and make use of our Taxes for ” personal” purposes , at the expense of the poor, needy, elderly, the sick and Persons with Disabilities, to name a few. Tax money allocation, is distributed or set aside , using the ” National budget” or DAF, since , PDAF , was declared as unconstitutional by the Supreme Court.
The DISBURSEMENT ALLOCATION FUND, ( DAF) is allocated by through THE Department of Budget and Management. That is why, Senator Miriam Defensor-Santiago said Budget and Management Secretary Butch Abad should resign out of delicadeza due to the Disbursement Acceleration Program (DAP) controversy last October, 2013 according to Louis Bacani of Philippine Star.
This month alone, the very start of the year, we are all in ” pins n needles ” Because , the National Government and LGUs are all eager to increase Real Estate Taxes. For example, The City of Manila, has proposed to increase its Real Estate Taxes.. That is just the ” tip of the ice-berg”.
I can foresee, there will be a more aggressive taxation campaign, they are starting to do the desperate acts, like even going to the sidewalks of the City, to TAX vs ” the Lechon business” .. But why not TAX also the ” PORK BARREL” funds that was used for Congressmen and Senators via ” FOUNDATIONS for the POOR” under the ” care” of NAPOLES & Co.?
We wonder why is it the Top 1000 corporations, conglomerates and richest people in the Philippines, pay less of the tax they should be paying? The rich people hires accountant who helps them to avoid paying the rightful amount of their tax. The middle class are the people who carry the burden of paying 32% income tax for wage earner according to EconomyWatch.com. They are the wage earner people whose income is automatically deducted every payday. For the less fortunate, taxes are being paid, on their expenditures (VAT).
The rich, those who profit most from society, are also those who give back the least.
In a report of Mar S. Arguelles last July, 2013 in Inquirer Southern Luzon, former Arroyo economic adviser and Albay Gov. Joey Salceda said, “The biggest failure of the Philippines as a nation-state is its inability to tax the rich,” adding that disparity in the income growth rate between the rich and poor would persist unless government initiated drastic measures to collect taxes from the rich.
Salceda cited a National Statistical Coordination Board (NSCB) study that showed how income growth among the high-income class tended to be faster compared to that of the middle- and low-income classes because of the government’s failure to tax the wealthy.
Wide income gap
According to the NSCB report, the high-income class posted a 10.9-percent income growth rate in 2011 against the 4.3-percent income growth rate among the middle-income class.
“The inability of the state to tax the rich is the principal cause of the wide income gap between the rich and the poor,” said Salceda.
The former economic adviser stressed that consumers, especially overseas Filipino workers and employees, most of whom compose the middle class, get much of the pain in the reformed value-added tax (RVAT) and the higher sin taxes. The RVAT was enacted during the Arroyo administration.
“The rich always run away with the money since they enjoy tax exemptions, lower tax rates or have tax lawyers to fight the Bureau of Internal Revenue,” Salceda said.
He added that the trend (of an increasing gap in growth rate between the rich and the poor) confirmed an analysis by Forbes, a leading source of financial information, that the wealth of the country’s top 40 corporations accounted for 76 percent of the country’s nominal gross domestic product (GDP).
Salceda said the government’s failure to collect taxes from the rich could result in the loss of billions of pesos in potential tax revenues. He added that should the government turn serious in collecting these taxes from the rich, the state would be earning an estimated P320 billion in tax revenues, more than enough to finance government expenses.
Because of these some Real Estate transactions, do not materialize, because of the tax burden. Sellers will prefer to have the buyers pay the VAT which is credible, however, in my experience, most buyers refuse since it will be an additional cash outlay on their part even if it is credible.
Big tax: Real estate taxes, allocation, local, national government, and why Real Estate Transaction may end up in smoke.. Seller will not sell because of exorbitant Taxes, while Buyers will hold back if they are made to pay the TAXES, and VAT.
Tomorrow, we shall continue with the topic of real estate taxes, zonal valuation vs. market value and my concerns about its effect on the real estate market.