Once again, the center of talk is taxation. For a while, there were rumors that Malacañang was thinking of imposing new taxes as a way of coping with the uncertainty caused by the collapse of the multi-billion dollar US home mortgage sector.
And who can blame the executive branch of government for thinking that way. After all, the largest economy in the world is banking on taxation to rescue its floundering economy.
The failure of the US Congress early this week to pass the proposed $700-billion bailout package is being viewed as a threat that could drag more financial institutions across continents into insolvency, and ultimately paralyze the world’s financial resources.
In the Philippines, a substantial number of banks and financial institutions that have exposures in several bankrupt US investment firms stand to lose a sizeable amount of their money if the bailout plan does not materialize.
On the side of government, a collapse in the global financial system could induce a tightening in credit sources, something that ultimately could affect the country’s ability to pay maturing debts.
Should this happen, there would be immense pressure on Malacañang to initiate measures that would increase internal revenue collections. Easily, this would come in the form of new taxes rather than tightening the current tax collection system.
Return of full oil tariffs
In the meantime, full tariff on imported oil has returned with crude prices sliding nearer the $100 mark, from a high of $147 per barrel in July. Together with the continued expanded VAT slapped on oil products, levies on oil and oil products continue to provide an unexpected buffer fund for government.
And yet, as we have noted in past columns, this extraordinary income has not been and is not being put to best use. So far, the money has been spent on rice and diesel oil subsidies supposedly to cushion the effect of high prices on poor households and the transport sector.
The issue of high rice and oil product prices has lost much of its pain in recent months as our countrymen have learned to cope with these realities. But even with the drop in crude oil and grain prices lately, the tax bonanza from oil alone continues to be formidable.
The money should have been allocated to meaningful programs that address basic issues of rice shortages, dependence on imported oil, sub-standard education and even poor health care delivery.
I still do not espouse the total removal of VAT on oil products. But in the absence of government’s inability to allocate the additional tax collection for more worthwhile programs, pegging the VAT to a lower oil price would translate to lower pump prices, ultimately a more equitable way of easing the burden of high food and fuel costs for more people.
And during these times when there is an expectation of more difficult times should the US economy continue its deceleration, this should be a better way of rationalizing the use of the E-VAT bonanza.
Half-baked exemption
It’s a pity that the implementing rules of the Income Tax Reform law granting full tax exemptions for minimum wage earners has been mangled by the Bureau of Internal Revenue.
Effectively, the law now discriminates against minimum wage earners who derive additional income from other channels such as sari-sari stores or micro-businesses. Our daily wage earners need all the support that government can give during these hard times.
What the BIR should have done was to stick to the intent of the law, and to grant full exemption for minimum wage earners regardless if they have “sidelines” or other sources of income thru entrepreneurial initiatives like micro-businesses. Instead, the BIR should improve its collection of taxes due from business establishments.
There are also many ways by which government could raise its revenue income. One glaring instance is the standardization of taxes on cigarettes and an increase in the take on alcoholic beverages – two “sins” that could afford higher levies.
Single ‘sin tax’
No less than the International Monetary Fund has been pushing for government to adopt a single rate for cigarette taxes. This move is expected to bring to the government coffers about P32 billion in additional revenues on its first year of implementation.
All that is needed is for the Department of Finance (DoF) to push for the amendment of the 2005 Sin Tax Law that covers a complicated four-tier tax system on cigarettes.
Under the proposed bill authored by Rep. Danilo Suarez, a uniform tax imposition would be determined on all brands of cigarettes. Even if this will raise the selling price of cigarettes, the market demand for the product is not expected to change.
According to Suarez’s bill, current excise taxes range from P2.23 to P26.06 a pack. This translates to an average tax of P5.64 per pack. A uniform tax rate of P14 per pack, which is not supposed to affect demand, will definitely help bring in additional revenues.
This proposal seems so logical and yet the DoF appears to be dragging its feet on this. Makes one wonder who in the cigarette business is influential enough to block this move.
Collegiate Champions League update
The battle for slots in the zonal championships is in full swing in the SMART-PLDT-Champions League 2008 Philippine Collegiate Championship games. After completion of the regular “mother leagues” tournaments, 36 teams qualified to compete for eight regional championships to earn a slot in the zonal phase of the collegiate championship.
To date the following teams have been declared regional champions: Region 3 (Quezon/Bicol provinces) – University of Nueva Caceres Greyhounds of Naga City; Region 5 (Bohol/Dumaguete) – BIT International College Cruisers of Tagbilaran, Bohol; Region 6 (Ormoc/Tacloban) – AMA Computer Learning Center Titans; and Region 7 (Cagayan de Oro) – Xavier University.
The following are the schedules and venues of the other regional games: Region 9 (Zamboanga Provinces), Oct. 4-6 at the Zamboanga City Coliseum; Region 1 (Ilocos/Baguio), Oct. 6-7 at the University of Northern Philippines gym, Vigan City; Region 2 (Pangasinan/Pampanga), Oct. 9-10 at the Divine World Gym, Dagupan City; and Region 8 (Davao/GenSan), Oct. 9-10 at Gaisano Gym, Davao City.
For highlights of regional games and interviews of budding talents from the provincial collegiate basketball circuit, watch the Solar Entertainment television show, “One U,” aired every Tuesday, 5 p.m. at RPN-9 and replayed on same day, 9 p.m. at BasketballTV.
For more details about the biggest collegiate basketball event for the year sponsored by SMART and PLDT, visit the official website, www.CollegiateChampionsLeague.net
Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.