Taxes: Uglier the second time around

Secretary of Finance Ralph “The VAT” Recto or Mr. E-Vat himself is at it again. After getting away with pushing and sponsoring the value-added tax law in 2005, he is now meddling with the intentions of the TRAIN Law that reduced estate taxes in 2018.

If we allow Recto to get away with slapping us yet again with increased taxes, Filipinos will now have to pay higher capital gains tax, donor tax and estate tax from six percent to 10 percent. Recto and the “econo-misseds” of the Marcos administration keep using the term “rationalization” as their excuse for taxes.

In case Recto et al. have forgotten, the reason president Rodrigo Duterte and his economic team passed the TRAIN Law was because many Filipinos could not afford the added injury to families who lost a parent, paid hospital bills and funeral expenses only to find their inheritance “held for ransom” by the BIR back then.

Even the BIR and the business community were affected by non-payment or non-movement of property and wealth because most families did not have the knowledge and financial means to pay for the 20 percent estate taxes. They chose not to declare the death or dispose of property and so NOBODY got paid.

The reduction to six percent of the estate tax proved to be the rational act of government because right after the “no-fault/no penalty” rule, thousands of families, some who waited 25 years, quickly grabbed the chance to settle their estate taxes and sold off properties.

Unfortunately, one area that seems to have been left out has to do with the capital gains tax. Many realtors have been calling on law makers and government to correct the system of computation where government should only tax the “gains” made from a property and not the total declared value.

If a property was bought at P10 million and appreciated to P12 million, then the “gain” on the capital should be P2 million and not P12 million. Government and Congress can’t even rationalize or standardize between Assessed Value versus Market Value!

In my opinion, when government officials use the term “rationalize,” it only means they have to find a way to pay for the irrational or corrupt spending of the government or a way to pay for their irrational borrowing overseas and in order to be able to borrow more.

Instead of slapping Filipinos a second time, Secretary Recto should make an effort to find better targets to tax. So many companies brag of their amazing year-end profits, there are so many individuals who brag of being the country’s richest and there are many industries and sectors that have a puzzling boom.

Why give preferential tax breaks on vehicles while countries like Singapore etc. are doing the reverse? Why pick on the small fry, Mr. Secretary? Because they don’t have a voice among the rich in Congress and the Senate?

Among the many promises of Mr. Bongbong Marcos was the “right sizing” of government. Had he seriously and sincerely pursued that plan, he would have been way ahead of President Donald Trump, who put up the DOGE or Department of Government Efficiency under Elon Musk.

The Philippine government is the biggest employer in the country, spends most of its budget on salaries and overhead, is deemed inefficient and corrupt in terms of productivity, heavily reliant on private sector infrastructure development and is an absolute loser in terms of giving direct benefits to citizens.

Filipinos, both rich and poor, have to ask for help, assistance or rescue in areas where other countries and government excel in their standard of support and delivery. Businesses can’t do business without having to go through fixers, pay bribes or ask for favors from city halls, barangays, etc.

The government and Congress control funds for health care and make themselves the dispensary of medicine and medical services then turn their offices into places for begging alongside PCSO, etc.

Even real taxpayers have to go door to door to cover exorbitant medical and funeral costs!

While driving through barangays in Makati and Pasig, I saw the different steel gates and guard houses on almost every street, and these reminded me of the time when these gates were put up by “street associations” funded by residents to protect them from rampant crimes before the Duterte administration.

For a while those gates were kept open during FPRRD’s time. But they have started becoming “functional” once again because of public concern and perception that criminality is on the rise.

Our once provincial neighborhood in Lipa City has now been “invaded” by property developers from Metro Manila and people are wondering how this is happening in spite of an oversupply of condominiums for the next eight years. Where is all the money coming from?

In contrast to that, the Marcos administration and the Philippine government at large has turned public housing into a political promise lacking in will, funding and expertise. This is what happens when campaign donors are put in charge.

During the time of Ferdinand E. Marcos, they would put up signs around infrastructure projects that said “This is where your taxes go.” Back then, the rumors were 10 percent to 15 percent went to the pocket of corrupt politicians and DPWH.

Today, no one dares to put up the signs or tell us that 40 percent to 50 percent goes to paying foreign loans, while the rest are cut up in pieces among piranhas with legs. That is where your taxes go.

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