No win situation
The problem with the proposed Tax Reform for Acceleration and Inclusion (TRAIN) Act is that there is no assurance that it will not backfire.
The bill, which has been certified by President Duterte as an urgent tax reform measure, will impose additional excise tax on fuel, will tax sugar-sweetened beverages, while lowering personal income taxes and increasing the value-added tax threshold.
They say that the measure, which is expected to be signed into law by December, will raise as much as P134 billion in additional revenue.
But did they even bother to estimate the burden that the Filipino people, in particular those in the lower economic classes, will suffer as a result of higher fuel prices, increased prices of beverages, and the resulting loss of revenues and employment to micro and small and medium enterprises (MSMEs) to which sari-sari stores selling these sweetened beverages belong to?
As proposed by the Senate, the first P150,000 annual taxable income and the first P82,000 in 13th month pay and other bonuses will be tax-exempt. Taxpayers with up to four dependents will also have an additional P100,000 in tax exemption. While it is true that many Filipinos will be taking home more of their pay, the additional taxes that will be imposed on goods means that they might not be able to enjoy the additional take-home pay.
Instead of burdening Filipinos with additional taxes, government should have raised additional revenues from uncollected taxes and customs duties.
The revenue leaks are not small, mind you. A recent study conducted by the Federation of Philippine Industries and the University of Asia and the Pacific on the impact of illicit trade on the Philippine economy showed that from 2011 to 2015 and in eight industries alone, the country lost around P904.6 billion to smuggling. This means that smuggling in these eight industries lowered the gross domestic product (GDP) by an average of 0.9 percentage point during those years.
Household income decreased by 0.31 percentage point while employment went down by 2.38 percentage points during the said period. Those losses meant a P77.2 billion decrease in household income, and resulted in approximately 291,070 displaced workers, the study revealed.
The study covers only eight industries. Imagine how much more the Filipino people have lost through the government’s inability to fully combat illicit trade and to collect the right taxes and customs duties.
If the President wants a more inclusive economic growth, then he should focus his effort on combatting smuggling and illicit trade, rather than imposing new or higher taxes.
Proudly Filipino
Dragon Fireworks Inc. (DFI), the biggest and most awarded fireworks manufacturing company in the country, has bagged the Jury Prize at the Festival D’ Art Pyrotechnique de Cannes in France recently, the most prestigious fireworks display competition in Europe held last month.
Because of this honor, DFI was invited to the next round, dubbed the Battle of the Champions edition wherein all winning nations over the last three years of the competitions would square off.
According to Joven Ong, DFI managing director, the invitation is a huge honor because it is one of two most prestigious World of Fireworks championships.
Ong, president of the Philippine Fireworks Association, said that with the win, the company would be able to convince other nations to make the Philippines a tourist destination.
DFI has also already won at the Pyronale in Berlin, Germany; the Gold Prize in Flammende Sterne in Ostfildern and the Silver Prize at the Silver Anniversary edition of the Hannover International Fireworks Competition held at the famous UNESCO World Herritage Herrenhausen Gardens.
Don Miguel Villarosa, Eduard Ilagan, Hans Ong, Jay Turingan, Joseph Veloso, Oliver Zeng and Vander Tenedero choreographed the winning DFI fireworks display.
DFI is busy crafting a good concept for an even grander fireworks display next year to ensure getting the championship and Gold Vestale which would add another honor to the country.