Where do all our taxes go?

I always had a notion that the taxes we pay are too high. But as I went through the figures in a detailed study, I realized that the tax percentage taken away from our salary is a fair amount. For instance, a minimum wage earner (receiving P10,536.00 a month) is not required to pay tax. A person receiving more than the minimum wage is deducted an average of 15-20% withholding tax depending on the status of the person whether single, married with or without dependents. Our taxable income is further reduced after we apply the allowable personal exemption for our additional dependents. Surmise to say, the taxes we pay are not that high.

The question is: where do all our taxes go? Are we subsidizing the poor? Well, for obvious reasons – I think we are. Taxes should go to sustaining, maintaining, and improving public services provided by government to its citizens. Unfortunately, the rich and the middle upper class don’t seem to benefit from these services. The services are antiquated, tacky, dirty, deficient, substandard and decrepit. For instance, how can you take advantage of the government hospitals when just upon entering the premises you feel you will catch a bad virus that will worsen your condition? How can you send your children to a public school knowing they will not get quality education with the poor environment, incomplete classroom equipment and substandard curriculum that does not meet international standards? When people are in need to improve their quality of life, how can they run to the social welfare department knowing that this department cannot even resolve the problem of families seen in the streets; when it can’t seem to uplift the lives of abused children/ handicapped children/ indigent members of society; not to mention the needs of the senior citizens. How can we rely on the Fire and Rescue Service of government when the trucks are rickety and old junk? Why can’t our taxes pay for new ones? There are many more government services that every citizen is entitled to – including safety, national security and protection of life. Unfortunately they are really in bad shape. Citizens now have to find ways to subsist on their own. But why? Shouldn’t government services be available to all, regardless of income?

Another problem that has already become a “pet peeve” for many of us is the never-ending corruption in this country. I know that corruption exist in every part of the world but why does it need to get in the way of improving public services. Why do the leaders allow corruption to thrive? In fact, right now as the taxes are collected, many tax collectors are stealing money from the people or from the government. They are continuing to enrich themselves even under the watchful eyes of this new administration. Something is very wrong. Why can’t they seem to catch these punks?

In other words, we feel cheated by government and by our public servants. Even if many government employees feel that they have worked hard and have not have been corrupt in the service, the bottom line is that the people feel betrayed, cheated and victimized. Our government workers cannot afford to be meek. They shouldn’t protect the corrupt in their offices. They should protect the rights of the people. In doing so, they protect their families as well. They should realize that “honesty is the best policy”. Corny but true!

Anyway, going back to my study, I gathered that even if a person earns a good amount of money let’s say P35,000 a month after taxes have been deducted, he will not be able to meet his monthly cost of living. To a regular Pinoy, the cost of living in this country is quite high. Based on a simple survey conducted, a working couple with at least two children, both with an average salary of P18,000/month or a total of P36,000, less monthly expenses, will have a deficit of P6,700 /month. The present cost of living seems to be skyrocketing continuously, so much so that the expenditures mainly cover the barest necessity for the family to survive. The biggest chunk goes to food (50%), followed by house rental (23%), transportation (10%), utility bills (6.5%), and education (6.2%). Note that this does not include medical expenses, clothing and recreation for the family.

What happens if only one spouse is working? This family of four will be short by about P10,000 to meet their needs. So, how will the head of the family get the funds to make both ends meet? This is where loans and credit cards come into play. This will then become an endless cycle of borrowing and paying high interest rates (to the loan sharks) just to live a decent life. In the end, everything adds up to a dangerous situation. Do we want to see more Filipinos fall prey to illegal activities just to earn an extra buck?

Statistics show that proportion of the population living below US$1.25 a day in 2006 was 23 percent or around 20 million people. At the same time, about 44 percent or over 40 million Filipinos were living on less than US$2 a day. Although we may have reduced poverty incidence from as high as 30 percent in the early 1990s, the actual number of people living in poverty has increased over the last two decades. The global food and fuel price crises in 2007 and 2008, and the global economic crisis that followed, are estimated to have pushed even more people into poverty.

Ramon Carandang, Secretary of the Philippines Presidential Communications Development and Strategic Planning said that the government will not raise tax rates or instate new taxes this year despite suggestions that it is necessary for the country to meet the UN Millennium Development Goals by 2015. These goals are to: eradicate extreme hunger and poverty; achieve universal primary education, promote gender equality and empower women; reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases, ensure environmental sustainability and develop a global partnership for development.

The 2007 Midterm Progress Report on the MDGs show that economic growth in the Philippines has not been strong enough to speed up the pace of poverty reduction; insufficient investment in education particularly on teaching and infrastructure has negatively affected access to, and the quality of education; and the target of 52 deaths in the maternal mortality rate will not be met given the current trend estimated at 162 from 172 in 1998. There are also areas still needing access to safe drinking water and sanitation.

The Aquino administration should not take all these information in stride. It must take serious and determined measures on alleviating poverty while at the same time improving public services for the benefit of the whole nation – not only for the poor.