ASSETS & TAXES: 'TAXING PEOPLE WHILE GOVT SWIMS IN SEA OF CASH IS CRUEL'
[PHOTO - AMADO P. MACASAET- MALAYA BUSINESS INSIGHTS COLUMNIST]
MANILA, OCTOBER 8, 2011 (MALAYA) AMADO P. MACASAET - (‘Taxing people while the government swims in a sea of cash is a cruel act.’ )
IF one were to examine the mountains of cash and the assets of government which could be converted to money to fund the needs the state, one wonders why Finance Secretary Cesar Purisima is so eager to punish the consumers with heavier tax burdens.
Let’s begin with idle lands that government may well sell to shore up government finances. Total area of golf courses of the Armed Forces is estimated at 200 hectares. An even bigger area is the military reservation in Laur, Nueva Ecija. It has a sprawling idle land at 70,000 hectares. The penal colony in San Ramon is about 70,000 hectares. There is another 12,000 hectares in Davao where minimum security prisoners roam free.
Including the 40,000 hectares in Iwahig and 3,000 hectares in Sablyan, penal colonies alone have a total area of 125,000 hectares of land practically lying waste. If the government had privatized the more important Fort Bonifacio, also a military reservation and camp, there should be more wisdom in selling to the private sector the penal colonies, the golf courses of the Armed Forces and the military reservation in Laur, Nueva Ecija.
Put together, the government has a total of almost 200,000 hectares that it can convert into money. This size of territory is bigger than many first class towns or cities.
This land is money that can shore up government finances. Or the proceeds can be used for economic development. Unfortunately, Purisima’s choice is soaking the people – the poor – who absorb practically all kinds of taxes.
This state land is food taken out of the mouths of the less fortunate. Purisima hardly cares probably because while his family may not have money in the billions, he was born with a silver spoon in his mouth.
He never knew what it is to have a small breakfast and not knowing where lunch is coming from.
The state is also sitting on a mountain of cash. For example, it is estimated that the Government Service Insurance System has P500 billion in cash and near-cash items.
The Social Security System has around P200 billion, PhilHealth has about P110 billion; the Employees Compensation, P70 billion and the Overseas Workers Welfare Administration, P13 billion.
How much do we have here? A whopping P990 billion which is slightly more than half of next year’s proposed appropriation of P1.8 trillion.
Let not Purisima say this huge sum is pension funds. We know that.
A thorough actuarial study should be made to determine how much of this money must be spent for the benefit of the contributors to the fund. The fund continues to swell by the month. That is why it has come to this size. Which means that there is a huge surplus that the government can use instead of burdening the people with more taxes that in turn slow down demand, particularly for consumer goods.
Under the law, pension funds may not be invested in speculative instruments.
Precisely. Why then doesn’t the government borrow this money at a yield slightly more comfortable than Treasury bills?
There are two advantages. The owners of the fund are assured that their contributions are lent to the state. The borrowings are sovereign liabilities.
Government does not default on its debts. Not even on foreign obligations considering the present state of the economy.
Banks buy government IOUs for a spread. The yields, minus withholding tax, go to the lenders, principally the commercial banks and other financial institutions. We know that banks invest depositors’ money for the benefit of their stockholders and the owners of the fund. Deposits are liabilities of the banks.
Treasury bills make the rich even richer. More and heavier taxes make the poor even poorer.
These reserves of public funds may not even qualify for case studies in Harvard Business School. They are real, not theoretical. But Purisima does not appear to be real. He is more theoretical. He believes in the certainty of taxes like he believes in the certainty of death.
Only problem if the tax in his mind can be avoided, or at least postponed. Death is destiny. Taxing people while the government swims in a sea of cash is a cruel act which more so if we remember that President Aquino swore to high heavens that no new taxes will be enacted by his government this year.
The President yielded to his own people such as his own finance secretary. The House went on to think tax.
The funny part of all these is infrastructure and other projects which would have created hundreds of millions of jobs never came up for one stupid reason. The government failed to spend the money allotted in the National Appropriations Act.
And now comes the likes of Finance Secretary Purisima with a mind full of tax matters all against the people and business.
It is probably to the discomfort of Purisima that Sen. Juan Ponce Enrile declared that the House can discuss taxes on distilled spirits until their voices are hoarse, but when the measure reaches the Senate, he will freeze it.
My personal pleasure in Senator Enrile’s position is that I have fought for the suspension of discussion of tax proposals on distilled spirits until the World Trade Organization decides the Philippine appeal on an interim report saying that some sections of the Philippine internal revenue code are discriminatory.
The appeal has been filed. I find the arguments easy to understand. We have a good case, a case that does not seem to have a place in the tax mind of Finance Secretary Purisima.
We find the ideas of Purisima too taxing. He serves a government that cannot even spend the national appropriation but busies his mind on laying his hands on tax money when the state has a lot for the picking.
FROM MANILA DAILY BULLETIN
Enrile blames Congress for taxing poorBy MARIO B. CASAYURAN September 15, 2011, 7:16pm
MANILA, Philippines — Senate President Juan Ponce Enrlle (photo) Thursday admitted that Congress is partly to blame for giving tax incentives to the rich but continues to increase taxes on the poor.
In a public hearing by a Senate finance sub-committee, chaired by Sen. Ralph G. Recto, on the proposed P11.5 billion budget for the Department of Finance and its affiliate agencies for 2012, Enrile said that ‘’on the side of revenue generation, we in Congress are to blame. We give tax incentives such as no capital gains tax for the rich but we increase tax on the poor.. the VAT (value-added tax) ..all these are burden of the masses but the affluent they live comfortably out of taxes foregone by the government in their favor.’’
He said the biggest contributor to the government coffers is the VAT that poor people pay.
He asked: ‘’Is this in accord with our constitutional provision that we have to develop a progressive tax system?’’
The Senate chief cited government plans to increase taxes on cigarettes, wines, and distilled spirits which have perceived ill-effects on people’s health.
‘’These are consumables for the poor people of the country yet we are targeting this as a source of income for government but in the case of the big guys, they amass wealth, they export their incomes instead of using them here, they bring them to China to give jobs to the Chinese, to Papua New Guinea to give jobs to Papuans, to Canada to give jobs to Canadians and to Guam to give jobs to Guaminians but no jobs for Filipinos,’’ he said.
Enrile also admitted that he cannot understand why the government is trying to attract foreign investments when “we are also exporting capital and I cannot understand this policy.’’
‘’Is there anything that prohibits us from imposing a capital tax on these people? Or why not impede them from exporting capital?’’ he asked.
Finance Secretary Cesar V. Purisima (photo) assured Senate leaders Thursday that his department has begun an in-depth review to come up with an equitable and progressive tax system.
Recto also told Enrile that he, as chairman of the Senate Ways and Means Committee, is in constant contact with Purisima on the need for Congress to amend about 180 tax-related laws for a rationalized fiscal incentives program.
In defending the proposed 2012 budget of the Department of Finance (DoF) and its related agencies such as Bureau of Customs (BoC) and Bureau of Internal Revenue (BIR), Purisima said the national government is targeting a programmed deficit of 2.6 percent of the gross national product (GDP).
‘’This is well within our program of reducing our deficit to two percent of the GDP by the end of 2013 and the plan is to maintain it at that level for the rest of the (six-year) administration of President Benigno S Aquino III,’’ Purisima said.
He also said the DoF plans to increase the government’s credit rating ‘’and we plan to attain investment grade status sooner than later hopefully by 2013 or 2014.’’
To reach that goal, Purisima said, the government will have to generate P1.568 trillion in 2012 or an increase of 14.2 percent of the GDP.
Recto said his committee is working closely with Purisima and other related agencies on the proposed fiscal incentives rationalization program.
He quoted Purisima as saying that 40 percent of the country’s economy are exempted from paying taxes, particularly in the export sector.
Sen. Angara decried the misplaced concern of the Aquino administration of reducing the deficit instead of focusing its attention on the economy and the creation of jobs.
Based on data from the Bangko Sentral ng Pilipinas (BSP), Angara said there is about P1.8 trillion that is parked at the country’s banking establishment.
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