ECON

Project in Economics
(Reaction paper)



Submitted by: Isidro Villa Jr.




Submitted TO: Mrs. Cecelia Suarez











Economy Higher Tax Collections Expected for Second Half
08/03/2009 | 10:02 PM GMANews.TV

The Philippine government expects to collect more taxes in the second half of the year, citing brighter economic prospects and agencies’ renewed efforts to meet their financial goals.

This was announced by Finance Secretary Margarito B. Teves during the 105th anniversary of the Bureau of Internal Revenue (BIR), the Philippines’ largest revenue source.

The government, “should be able to collect more because of improvements in the economy in recent months," Teves told reporters.

While he refused to cite specific figures, Teves said that the government’s main revenue agencies – the BIR and the Bureau of Customs (BOC) – were instructed to generate at least P332.82 billion from July to September and another P324.96 billion from October to December this year.

The economic slowdown during the first half reduced collections, hurting revenue targets of the BIR and the BOC.

During the period, the BIR and the BOC – the government’s largest and second-largest revenue sources – missed targets by P12.813 billion and P20.117 billion respectively.

Both agencies’ inability to meet goals were hampered by the economy which only grew by 0.4 percent, lower than government expectations of 2.5 percent.

With an improving economy in the second half, tax collections would be “boosted," Teves said.

During his remarks, Teves also announced that he was likely delivering his last speech as Finance Secretary since he expects to cede his position to a successor next year, an election year.

“Since this could be my last speech for you, allow me to share with you what I learned to value and tried to apply in all my undertakings. They have helped me to think clearly and keep focused on the most important things that needed to be considered and done," he said.

“If we just persist in doing good in governance, performance, and relationship management, we are likely to see the day when we finally see the BIR as among the best and most efficient revenue agencies in the world," Teves added.

Tax, as it is defined by writers, is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state.(Smith)
According to WIKIPEDIA taxes are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government, a payment exacted by legislative authority.A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government.
Historically taxes served a must role in man’s civilizations and in today’s world government (especially capitalist state), though owns natural resources and other forms of wealth, collects taxes because the government must have an income to buy goods and services, finance transfer payment, and pay its debt and to cover all the expenditure incurred by the government in a given year.
In general term government gets most of its revenue from taxes and considered to constitute the bulk of the government’s income.
Theoretically we cannot deny the fact that through our taxes the government can able to redistribute income, stabilize economy and promote economic growth. In reality, however, our government has been subject of news because of anomalies and controversies in tax collections. Though, the changes is not visible to masses, our government claims they defeated the chaos brought by financial crisis or global recession because of good system in collecting and further in utilizing it to improve our economic status. Despite of the government’s claim, basing on the strong evidences we can firmly say that the system of BIR is not at its best that it threatens public interest.
Last 2003, we heard the uproar from movie personalities against the BIR’s implementation of the value added tax on professionals. News then come out that some personnel of the agency were not revealing their exact age to defer retirement on the office. There are pending bills in congress seeking the establishment of the National Revenue Agency as part of reform in tax administration(Philippne Daily Inq). Until now this bill not being passed into law because of some individuals and sectors that will be hurt with this change.
In my conviction increase in tax collection would really improve our economy as well as the standard of living of our people if and only if we change the system governing it. We should not risk our money to the corrupt hands because of the uncertainties that it can be returned to us by services provided by public goods. Adding that great amount of taxes (direct taxes to specific) would also mean increase in inelastic needs or commodities which the masses and the poor sector will be main affected.It could also be possible that this additional collection on tax would be the root of corruption for since election time is approaching and political party me need to finance their campaign.

I am against to this another abused of Margarito Teves administration. I will only condemn another collection of taxes if our government can able to regain the people's trust and confidence.