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legal entity) by a state or the functional equivalent of a state such that failure to pay is
punishable by law. Taxes are also imposed by many administrative divisions. Taxes
consist of direct or indirect taxes and may be paid in money or as its labour equivalent.
(1)
It is a "pecuniary burden laid upon individuals or property owners to support the
government [...] a payment exacted by legislative authority." It "is not a voluntary
payment or donation, but an enforced contribution, exacted pursuant to legislative
authority" and is "any contribution imposed by government [...] whether under the name
of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other
name." (2)
The primary purpose of governments to implement policy on taxes is to gain
revenue.
Tax collections in the Philippines comprise the biggest percentage of revenue
collected. Its biggest contributor is the Bureau of Internal Revenue (BIR), followed by
the Bureau of Customs (BOC). (3)
The principal taxes collected include: taxes on income and gains (income tax and
capital gains tax on sale of shares of stocks and real property); taxes on transactions
(value-added tax (VAT), excise tax, percentage tax on business not subject to VAT, tariff
and customs duties, and estate and donor's taxes); and taxes on property (real property
tax and community tax). (4)
This paper aims to discuss some of the Philippine Governments Policy on its
taxes on transaction, particularly the Value-Added Tax (VAT) and the Expanded VAT (EVAT) Laws.
medicine and by lawyers; sale of cotton and cotton seeds in their original state; sale of
nonfood agricultural and marine and forest products in their original state; and sale of
works of art, literary works, musical composition and similar creations. Thus, the VAT
base is effectively broadened.
Some mitigating measures are introduced under the new VAT law to offset the
impact of the above expanded coverage. For instance, the price increment of petroleum
products due to VAT is expected to have a significant effect on transportation costs.
However, said price increases will be partly negated by the reduction in the excise tax
on diesel, kerosene and bunker fuel oil. Since diesel-powered vehicles are more
frequently used in public transportation, the rise in land transportation fares will be
mitigated. The same holds true for the price of transporting cargo.
Moreover, to reduce the effect of the VAT on the price of electricity, the 3 percent
franchise tax on power distribution utilities was also removed. For domestic carriers by
air which are now fully covered under the expanded VAT, the franchise tax under their
charters had been abolished as well.
Consumer vigilance is therefore required to ensure that unscrupulous producers
do not take advantage of probable confusion on the effect of the broadened VAT
coverage to justify unreasonable increases in the price of basic commodities.
Under the old VAT system, the entire VAT collection went to the Bureau of the
Treasury and could be used by the government for any purpose. Under the reformed
VAT law, however, half of the local government units (LGUs) share in the incremental
VAT collection is earmarked for social and economic services. In particular, 15 percent
goes to public school buildings and furniture and in-service of public school teachers in
the elementary and secondary levels; 10 percent to health insurance premiums of
indigents; 15 percent to environmental conservation; and 10 percent to the construction
of farm-to-market roads and irrigation facilities.
The reformed VAT law contains other provisions that affect other taxes, to wit:
raising of the corporate income tax rate from 32 to 35 percent up to the year 2009; and
increase of gross receipts tax from 5 to 7 percent on royalties, rentals of property, real
or personal, profits from exchange and all other items treated as gross income of banks
and nonbank financial intermediaries.
The reformed VAT law aims to generate additional revenue to address the fiscal
condition. Based on the estimates from the Department of Finance, the E-VAT will
generate additional revenues amounting to more than P80 billion in 2006, a large part of
which is expected to come from the lifting of VAT exemptions with potential revenues
amounting to P39 billion. All of these projections, though, are based on a 70 percent
collection efficiency. Thus, the deteriorating collection effort needs to be addressed and
strengthened to ensure the success of the reformed fiscal measure.
An article in Bukisa.com said Taxation is meant to be equally applied to all;
everyone should bear the burden. However, it seems that bill is just making the rich to
be richer and the poor to be poorer. Majority are affected on this bill, but sectors that
profit the mostoil, energy, telecommunication will still get among within many and
lucrative exemptions. This is not to say that these industries do not contribute to
national development, but it is to say that they also retain far more of the profits than the
ordinary citizen or even the ordinary businessman.
To sum it up, the government officials believe that implementing EVAT is the best
way to reduce our debt problems of the Philippines. In contrast, many think that it would
not help; instead it can make lives of people more difficult. In our present situation, the
government should also consider the economic status of the country. They should enact
laws that protect the people to ensure the survival of future generations. Moreover, they
should understand the situation that more people are suffering, because of the high
amount of taxes they asked. The problem must be given solution as soon as possible.
The most important of all is that, the improvement of a country could not only be seen
through infrastructures, but also in the way its people live.
REFERENCES:
1. http://en.wikipedia.org/wiki/Tax
2. Black's Law Dictionary, p. 1307 (5th ed. 1979)
3. Fiscal Update for Website." Department of Finance (DoF) Department of
Finance; n.d.. Web. 15 May 2011. Web
4. http://www.virtual-asia.com/ph/bizpak/bizguides/chapter_06.shtml - Principal
Taxes
5. http://en.wikipilipinas.org/Republic_Act_9337
6. Department of Finance. Briefer on VAT Reform Law. [Online] Available At
http://www.vatreform.gov.ph/
7. Eden C. Villanueva, Vat and Expanded Vat Law, http://dirp4.pids.gov.ph/
8. Manasan, R.G. 2002. Industry benchmarking for improved VAT
administration. PIDS Policy Notes No. 2002-17. Makati City: Philippine
Institute for Development Studies
9. http://www.bukisa.com/articles/expanded-valued-added-tax-in-the-philippines