taxes, national budget, OFW money and an idea :)

Next year, the Philippine government plans to spend PhP 1.645 Trillion.

Where they will spend is documented.

I truly hope they will spend it where they say they will spend it. Philippines could use some infrastructure to harness the 'green gold' it has and its 'blue gold', too :)

But where they will get the money, well that's another thing.

Any government has two sources of funds: the Internal Revenue (BIR in the Philippines) and the Customs.

Now let's put some numbers to make things interesting. By the way, these are rough numbers. Though it may not be precise, it is better than scratch. But to those who know, please correct this simple number push:)

A common taxpayer gives 30% of his gross income. Corporations, some numbers will point to about 40%. Let's level it off. Let's agree on 35% as taxes paid by any economic entity plying his trade in the Philippines.

So to meet the PhP 1.645 Trillion requirement, the net economic activity that has to happen in the Philippines must be at least PhP 5 Trillion in order to get a tax amounting to the proposed budget.

Of course, that's assuming that we paid all the taxes that needs to be paid, that we have collected all that needs to be collected and that no 'under the table' transaction ever happened.

Now, let's go to the OFW money, the greatest and most potent temptation ever presented to the Filipino politicians. Because of this money, politicians, as a whole, do not work anymore to improve the lot of their respective 'tribes', if we are to believe that the Philippines is simply a group of tribes made into a country. The family members of these respective tribes put it upon themselves to go out, gather and hunt farther from home because the current incarnation of the datu in their midst is nothing compared to Lapu Lapu. At least, Lapu Lapu was competitive :)

Back to OFW money:) The Philippine banking system received and processed about $20 Billion of OFW money last year. That's roughly PhP 900 Billion. And that's only the money that went through proper channels. We still have to figure out how much money the OFW actually have on them when they arrived :)

Assuming that this OFW money was spent in the country because this money after all, is used for tuition fees, clothing, food, utilities and text allowances :) the government is supposed to have generated PhP 315 Billion in taxes from these.

So, we roughly need about PhP 1.33 Trillion more :)

Let's now focus our attention to how much business the Philippine Top 1000 corporations created last year and apply the 35% on their income before taxes. And then, one also has to consider that the Philippines gets a VAT on all the raw materials they bought:)

With all those numbers spinning, why we still have a budget deficit? That we borrow funds locally and internationally to finance our PhP 1.57 Trillion budget?

Could the culprit be the assumptions we made? That we paid all the taxes, that we collected all the taxes and no 'under the table' happened?

For the individual taxpayer, the system was designed to ensure that he pays his taxes.

What about The Man on the top? The Man that signs the checks? What goes inside his head? That may make him not pay the taxes he owes the government?

Does he know that the more he does not pay the right taxes, the more the government needs him to sustain the much taunted employment numbers but to the very detriment of his very own Filipino workforce? And because he benefits from this very sick situation, will he ever pay the right taxes?

What if there is a committee, an NGO, a Greenpeace or World Wildlife Foundation of sort, that ranks all Philippine businesses on their love of country by measuring their honesty in paying taxes? And the higher their rank on this list, the more gwapo they look to their future employees? The future employees that truly hate the status quo because they are the ones who suffered most. They are the ones who has to live in a house when one parent was away. They are the ones who felt lonely. Felt alone. They are the ones who turned to drugs and to alcohol to numb the pain of not having a mother or a father at home. They are the ones that really carried the brunt of what the pundits called the social cost of the OFW trend.

The corruption dynamic is perpetuated by making sure that the status quo remains. But when a stakeholder or an unwitting player in this status quo realizes that he has the power to destroy the status quo and comes up with a better one where ALL the stakeholders prosper, then, improvement comes. Progress dawns.

And we still have to talk about the corrupt politicians and bureaucrats :)

"... why think like mere men?"