Govt. & Taxes, Philippines

Thursday, August 23, 2007

Congressional pork barrel

Estimating pork barrel funds per year for legislators:

240 congressmen x P70 M each = P16.8 B

23 Senators x P200 M each = P4.6 B

Sub-total = P21.4 B

But this is only "average" allocation. Congressmen and Senators who belong to the majority or the administration bloc get more, like those chairpersons and vice-chairpersons of big committees like the Committees on Rules, Appropriations, Ways and Means, Public Works, Education, and Agriculture. And of course, the House Speaker and his Deputy Speakers. So that actual pork barrel funds could be larger than P21 B/year.

But then some Senators give up their pork barrel funds, like Senators Panfilo Lacson, Franklin Drilon and Alfredo Lim did last year. Sen. Lacson is said to have not touched his pork barrel since 2002.

In addition, the President sometimes make it hard for opposition senators and congressmen to get their pork barrel share.

Wednesday, August 15, 2007

Taxes, smuggling and envy

Today, some 17 luxury vehicles (BMWs, Audi, high-end models of Toyota and Nissan, etc.) smuggled but caught in Subic were to be destroyed. These cars will not be auctioned off, but be destroyed. The reason: to show that the government is now more serious in its fight against smuggling and import tax evasion, no more compromises with smugglers.

When people have resources, especially from hard work and performance, they want to buy above-average and expensive goods and services. Like build a big house, buy modern and fast cars, buy latest gadgets and appliances, etc. So aspiring for "luxurious" things is a rationale behavior. It is aspiring for something, luxurious or not, when one doesn't have the means and resort to stealing and other criminal acts to get them, that is irrationale.

But government thinks there is something wrong when people would aspire to buy and drive modern and fast cars, especially imported cars. Hence, it slaps very high taxes (up to 100%, or 200%, of these cars' retail value, I'm not sure), sort of "luxury tax", to penalize whoever wants to drive those fast imported cars with high price, and use the money for the government's various social, political and economic services. Say more public school buildings and more pork barrel; more subsidized medicines and more pork barrel, and so on.

Those who want to drive those fast imported cars don't want to pay the high taxes, so they resort to bribing government officials in charge of administering importation and vehicle registration. On most cases, they succeed. On some cases, they fail. Like those 17 caught luxury vehicles. If the tax rates on those cars are not very high, or at least comparable to tax rates slapped on most, "non-luxurious" vehicles, then there will be less smuggling.

One can say that the temptation to smuggle those imported fast cars and bribe government officials to allow them to do so, is just an extension of people's rationale desire to acquire those things they want, so long as the resources they use to buy those things are from hard work.

On the other hand, the government policy of slapping very high taxes on imported "luxury" vehicles is driven not by reason, but by envy. Being "super-rich" is a crime and should be penalized with more taxes, so that the state will have more money for the poor and for the politicians.

Government can rationalize its tax policy to minimize smuggling by adopting a flat tax rate for imported cars (and all other goods), whether basic or luxurious ones. But it cannot expect to "eliminate" smuggling. Smuggling will only end if import tax is zero, and VAT and other taxes on imported goods is also zero, a move that government will not do at the moment, nor in the near future.

Meanwhile, all those high-profile moves to destroy the smuggled "luxury" imported vehicles are more a showcase of hypocrisy, not rationality.

Monday, August 13, 2007

Maintaining each Congressman/woman

In a news report, "The perks of being congressman", Posted by Alecks P. Pabico on 30 July 2007, these numbers were presented:

Table 1.
What the Public Spent for the Upkeep of Each Memberof the House of Representatives in 2005

EXPENSE ITEMS*, AMOUNT

Basic Salary, P420,000
Foreign Travel, P220,867
District Staff Allocation, P650,000
Contractual Consultants, P120,000
Research, P396,000
Consultative Local Travel, P788,764
Communication, P129,600
Supplies, P120,000
Public Affairs Fund, P308,400
Central Office Staff, P1,982,033
Equipment/Furniture and Fixtures, P21,538
Other MOE, P600,000

Source: Commission on Audit
*Figures for Foreign Travel, Consultative Local Travel, Central Office Staff and Equipment/Furniture and Fixtures are average amounts. The rest are uniform for all congressmen.

Table 2.
Annual and Monthly Upkeep of Each Member of the House of Representatives

YEAR, ANNUAL UPKEEP, MONTHLY UPKEEP

1994, P2.830M, P235,884
1995, P2.589M, P215,744
1996, P3.236M, P269,657
1997, P3.496M, P291,352
1998, P2.828M, P235,665
1999, P4.537M, P378,124
2000, P4.562M, P380,204
2001, P3.917M, P326,443
2002, P5.155M, P429,602
2004, P4.112M, P342,710
2005, P5.771M, P480,880

Source: Commission on Audit

In addition, each Congressman/woman receives pork-barrel allocations amounting to P70 million per year — P20M in Priority Development Assistance Fund (PDAF) and P50M as congressional allocation for public works projects.

Sunday, August 12, 2007

Makati's business estab., taxes

Makati City's business establishments, as given business permits by the City government.

a) business renewal:
Jan-June '06 = 23,536
Jan-June '07 = 24,506 (4.1% increase)

b) new business permits granted:
Jan-June '06 = 2,237
Jan-June '07 = 2,538 (13.5% increase)

c) business permit collections:
Jan-June '06 = P2.181 billion
Jan-June '07 = P2.427 billion (11.3% increase)

business permit taxes and fees include: health certificate, sanitary permit, fire department permit, mayor's business permit, other fees and charges.

In addition, if you want to renovate your office or house, you need to get "permit to renovate" from the City Hall. And after renovation, you need to get "permit to occupy".

By the way, before one can get mayor's business permit, one has to get a "barangay clearance" from the barangay. Also "location clearance", I think.

For offices in Makati's CBD, one also needs a permit from MACEA, aside from barangay permit, before one can go to city hall.

Just proves how "wonderful" government decentralization is. Lots of powers in the hands of LGUs to impose different kinds of permit, licenses, taxes, fees, and other regulations.

LGU count, mid-2007

As of June 30, 2007, the following are the number of local government units (LGUs) in the Philippines:

Provinces -- 81
Cities -- 131
Municipalities -- 1,497
Barangays -- 41,994

This can give us some estimates of the number of local government personnel.
For instance, there are at least 15 officials in each barangay (8 elected, at least 7 appointed, like the secretary, treasurer,health officer, tanod head, etc.). Some barangays have about a hundred employees, to include traffic officers, barangay tanods, brgy office staff, etc. So one can just multiply the average employees per barangay by 42,000 (round-off).

In addition, there are 230 Congressmen/women representing the congressional district, plus nearly 50 Party-list Congressmen/women.

Also, there are 17 regions (7 in Luzon, 3 in Visayas, 7 in Mindanao). But regional officials are bureaucracies under the national government, not under LGUs or Congress.

Wednesday, August 08, 2007

Hike in public transport tax

The Bureau of Internal Revenue (BIR) recently issued Revenue Regulations (RR) 9-2007, raising the common carriers' tax by around 2,600 percent. This tax has never been raised since 1978. The new taxes if this plan will push through, will be as follows:

1. M.Manila jeepneys, from P288 to P 7,884
2. Provincial jeepneys, from P144 to P 3,948.

3. M. Manila taxis, from PP432 to P11,832
4. Provincial taxis, from P288 to P 7,884.

5. Buses with 30 or less pass capacity, from P432 to P11,832
6. Buses with 31-50 pass capacity, from P720 to P19,704
7. Buses with 51+ pass capacity, from P864 to P23,652.

8. Cars for hire w/out chauffeurs, from P216 to P 5,916
9. Cars for hire with chauffeurs, from P360 to P 9,852.

Wow, the government never really runs out of plans to siphon off blood and sweat from taxpayers! Taxes, whether small or high, almost always result in distortion of prices, making prices of the taxed commodities or services higher. So government slaps these higher taxes, even on the assumption of lesser than 2,600 percent average increase, on public transportation. Operators and drivers of said public transpo will demand higher fare, and the series of inflationary impact will happen down the line.

Government is always a hypocrite institution. It says it wants to encourage energy conservation in the light of high world petroleum prices and global warming, urging people to leave their cars and take public transportation. Then government says it wants more money for itself and its "public services", so it is hiking the taxes on public transportation. Which will discourage more people to take public transpo because of higher fares, not to mention the inconvenience of various transfers from tricycle to jeepney or fx or bus to train to jeepney again. And thus, they would rather bring their cars to work and school for their kids. At the end of the day, the call for "energy conservation" is only lip-service, while the call for tax hike is the real goal. More money for itself, for its bureaucracy and pork barrel.

Low taxes, or zero tax on certain incomes and services, are "public service" by themselves. Because government allows the citizens to keep more money in their pockets so that they can use that money for their household and personal needs and priorities.

If this new round of tax hike -- remember the expanded and hiked value-added tax (VAT) of 2005 -- is objectionable, what is the alternative?

Retain the current tax rates on public transpo, and allow more competition among public transport operators. Allow air-con vans and fx to ply the routes of tricycles and jeepneys, to take longer routes, so that people will be encouraged to leave their cars and take the air-con vans. This way, we will have less traffic, less congestion, less pollution, and less greenhouse gases (GHGs) emission that contribute to global warming. Allow private operators to invest in modern, more commuter-friendly public transport system, instead of taking away their money that should go for fleet modernization, to the already bloated bureaucracy and unpopular pork barrel of politicians.

What about the budget deficit that refuses to go away? The big public debt that refuses to reduce significantly? It is time for government to look inwards, do the sacrifice from itself and not from the taxpayers, by cutting many of expenditures which are often either unnecessary or wasteful and corruption-tainted.