Posts Tagged ‘taxation in the Philippines’

Taxation is not only taxing; it is also vexing.

A few decades back, the doyen of public finance issued the following observation cum warning:

Fiscal policy, on both its tax and expenditure sides, should be among the most controversial of policy issues.  The fis­cal process…occupies the middle ground between anarchy and absolute rule.  It provides the forum on which interest groups and ideologies may clash…and on which compromise and cooperation may be sought.  The budget process can hardly be expected to function without error if only because it is cre­ated by the same conflicting interests which it must reconcile (Musgrave 1981).

For the complete post, please click on the link below:

Taxing your sins

By several standards, the Philippines has fallen behind her East Asian neighbors and suffer from predictable consequences. It is often said (and bragged) that the per capita income in the Philippines was second only to Japan in the 1950s.

Rosa Maria Alonso i Terme, an economist from the World Bank who was also recently a visiting professor at the University of the Philippines School of Economics (UPSE), reported that almost 60 years later, in 2012 it had slipped down the rankings of the region behind all the by-now-developed countries, such as South Korea, Taiwan, and Singapore, and all the upper middle-income countries, such as China, Thailand, and Malaysia. In addition, Vietnam and Indonesia had overtaken the Philippines in education results (Program for International Student Assessment tests), and were fast approaching it in income levels.

This drop down the rankings is not unique to the East Asian context. I Terme also observed that the Philippines is now also below the income per capita level of almost all Latin American countries, ranking below Guatemala. The World Bank meanwhile noted that the country also exhibits the highest level of income inequality and the lowest rates of poverty reduction in East Asia during the 1980-2010 period. Even more worrying, despite increasing growth in the 2000s poverty increased steadily from 2003 to 2009 and only registered a statistically insignificant decline from 28.6 to 27.9 percent between 2009 and 2012. The country also exhibits the highest tuberculosis prevalence rate in the region, and infant and maternal mortality rates that are significantly higher than the region’s average.


For the rest of the article, please click on the link below:–ph-needs-new-politics-with-a-new-tax-culture-at-its-core

Lucio Tan

It could be said that the merger of Lucio Tan’s Fortune Tobacco and the Philip Morris Philippine subsidiary (the Philip Morris Fortune Tobacco Corp., Inc) in 2010  is the equal of a marriage between Jollibee and McDonalds.  The result is control of the market. The Fortune-Philip Morris merger reportedly controls over 90% of the market.

While Fortune and Philip Morris consumated their marriage, a union between Jolibee and McDo was not, to my knowledge, even thought of by both parties.

The Senate is discussing several versions of the sin tax bill after the House of Representatives passed its version.

It is clear that the bill is not only about taxes; it is also about fair market competition.

British American Tobacco (BAT), the outsider protesting the Lucio Tan monopoly in the cigarette inIn other markets outside the Philippines, is supporting the sin tax bill for obvious reasons.  And that is, to find a place in a market dominated by another firm because of, among others, tax advantages.   In a sense, BAT is batting (pun intended) for a more competitive market in the Philippines.

However, BAT is not necessary a consistent champion for fair market competition.  In some markets outside the Philippines, BAT is dominant.  In Papua New Guinea, BAT is the only cigarette maker and distributor.  This drives home the truth that all firms with substantial investments will want to monopolize markets to ensure better profitability and lesser risks.  This insight is not the original contribution of a neoclassical economist.  The much-maligned Karl Marx made it first; more precisely, he observed that competition among capitalists and the workings of the modern financial system lead to market concentration and centralization.

This topic will be the subject of my next blog posts together with the items below:

Newly named Supreme Court Chief Justice Maria Lourdes Sereno beams before her oath-taking rites August 25, 2012

1. Ante the Supreme Court, Prof. Meilu Sereno, my UP Hardin ng Rosas neighbor and Christmas potlatch dinners

2. A logical analysis, based on open sources, of the political struggle over Secretary Jesse Robredo’s confirmation

3. Continuation of posts (about 4 more) on the property rights of the poor in the Philippines

4. Good politics, bad politics: Can we unite for the national interest while respecting our differences?

Dear reader, you are free to suggest topics that I should write on. Thanks and best wishes.