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Opinion

Taxing experience

SKETCHES - Ana Marie Pamintuan - The Philippine Star

Read his lips: there will be no income tax cut under President Aquino.

Never mind what his anointed Mar Roxas says – that the administration standard bearer is in fact for a tax cut but is deferring to the chief executive – although yesterday Roxas abandoned the wimpy ambiguity and reiterated his opposition to a tax cut without a corresponding increase in other taxes.

The House of Representatives, from which tax measures emanate, looks bent on passing a bill lowering personal income and corporate taxes. But a presidential veto looms so don’t hold your breath. The other condition set by the executive, apart from a compensating increase possibly in the value-added tax, is the lifting of bank secrecy laws for tax purposes.

We shouldn’t expect anything from this political football in an election season, but it’s good to nurture the proposal and keep alive the debates for the next administration to consider.

* * *

Other quarters have pointed out that the Philippines has one of the highest personal income and corporate taxes in the region.

These are on top of the 12 percent VAT that is slapped on everything from fuel to medicine to road use and property rentals. Look at the fine print on your utility bills and you will see VAT tacked on to every itemized detail of the amount due.

The .001 percent of the population simply pass on all the taxes to consumers. The middle class have no choice but to pay even as income taxes are automatically withheld; they make ends meet or else move to other countries. The very poor can’t go anywhere; they become poorer and wait for dole-outs.

Where do our taxes go? We have Asia’s eighth worst infrastructure, serious pollution problems and the highest homicide rate. Our cops provide security to too many VIPs rather than the general population.

We have turned the government into the nation’s biggest employer, with a large segment of the workforce simply wasting tax money.

I’m sure people will welcome any move to cut the billions we spend on the maintenance and perks of congressmen and senators. The party-list system has become a farce and should be abolished, with the “marginalized” sectors now including major political parties and the religious mafia. The youth councils have become mere entry points for perpetuating political dynasties.

Even the barangay system must be reviewed for its usefulness.

Many barangay officials don’t even know their duties under the law. They are supposed to prevent squatting, and yet a number of them are squatter landlords. They are supposed to prevent obstructions and illegal structures on public land. Yet they’re the ones setting up the obstructions on streets and sidewalks, including fake funerals to operate saklaan. Certain barangay officials protect jueteng and are part of the private armies of abusive political kingpins.

Barangay officials are supposed to serve as the first line of protection for victims of domestic violence. We have a tough law protecting women and children from domestic violence, but I know battered women who were refused assistance by barangay officials.

Action is quick only when it comes to raising funds. Barangay offices are authorized to collect fees, such as for parking, and they don’t even issue receipts. Those are public funds; how can the fees be audited without official receipts?

Barangay offices add to red tape and are among the biggest hindrances to doing business in our country. The business fees they collect are redundant and completely useless except to themselves. Why are taxpayers spending billions for this system?

* * *

The layers of barangay fees contribute to the low ranking of the Philippines in terms of ease of doing business and paying taxes.

A study conducted by international firm PricewaterhouseCoopers for the World Bank Group’s annual Doing Business report ranked the Philippines 127th among 189 economies in ease of paying business taxes.

As tax cut proponents have pointed out, it’s easier to pay business taxes in Afghanistan and Iraq than in our country where paying 36 types of taxes and fees can take 193 hours.

In the “Paying Taxes 2015” report, Hong Kong got the highest rating in Asia, requiring only three tax payments. Singapore followed at fifth place with five payments. But Singapore was ranked the easiest place to do business in the world, with Hong Kong ranking third after New Zealand. The others in the Top 10 were Denmark, South Korea, Norway, the United States, Britain, Finland and Australia.

In our part of the world, Malaysia ranked 18th in ease of doing business. Taiwan was 19th, Thailand 26th, Japan 29th, Vietnam 78th, China 90th, Indonesia 114th, Cambodia 135th, India 142nd and Myanmar 177th.

But Myanmar beat us in ease of paying taxes, placing 116th. Malaysia was a high 32nd, Taiwan placed 37th and Thailand 62nd.

Our close competitor Vietnam ranked 173rd. But it rated better than us in several other indicators for doing business: 125th in ease of starting a business (against our 161st place), 22nd in dealing with construction permits (we’re at a dismal 124th), 33rd in registering property (we’re 108th), 36th in obtaining credit (we’re 104th), 117th in protecting minority investors (we’re 154th), and 47th in enforcing contracts (we’re a low 124th).

Surely all these figures help explain why our glowing economic figures and investment grade credit rating have failed to translate into solid investments that create meaningful jobs.

We’re taxed to death. If the tax rates don’t kill you, the tedious payment process will.

And there are no reforms in sight.

ACIRC

AFGHANISTAN AND IRAQ

BARANGAY

BUSINESS

BUT MYANMAR

BUT SINGAPORE

DOING BUSINESS

FINLAND AND AUSTRALIA

HONG KONG

TAX

TAXES

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