Part 10 of 10
Recent events involving both the Bureau of Internal Revenue and the Bureau of Customs reflect a tax system so broken as to defy repair – a system that encourages and disguises corruption has consumed the safeguards intended to provide the revenue needed for national development.
In a country known for the encomiendero and the makapili, – a tax system riddled with temptation is a recipe for disaster.
Take away the trough so the pigs cannot feed.
Abolish all personal income tax – amnesty for prior years. L-VAT (Luxury Value Added Tax) for luxury items. The vehicle registration fee is adjusted according to make and model. Utility bills adjusted to real estate zoning, luxury real estate, whether in high-end gated communities or luxury condominiums. Travel and leisure are also taxed accordingly; the more exclusive, the higher the tax. Targeted VAT exempts non-luxury apparel, groceries, education, and medical costs.
Income taxes shifted to real property tax based on zonal valuation and transparency at the Register of Deeds.
Collect all customs duties and excise taxes at the country of origin. Except for contraband, illegal drugs, weapons, and the like, all imports, excise, and tariffs will be collected abroad under a mutual government-government agreement as needed.
Internal revenue allotment via a mathematical formula indexed on inflation that caps revenue shares for affluent jurisdictions in favor of poor jurisdictions.
Where there is no tax to collect, there cannot be an opportunity for enforcement compromise inimical to the national interest. Targeted VAT will be progressive at every turn. Real property taxes will become the lifeblood of the educational system. National Tax Allotment (NTA) – formerly the IRA (Income Tax Allotment Revenue Allotment) based on per capita GDP/GNP by State, will ensure a fair and equitable sharing of the national wealth.
The national tax allotment is calculated using these formulas – per the Department of Budget Management.
Under tax reform embodied by the Pillars of Federalism, the model is based on the actual incomes of each state. This will help stem the internal diaspora. Retaining population as a metric under the current feeds an endless cycle of cities receiving ever more significant revenue allotment share because rural folk will gravitate to the cities. Under the poorest to richest and share and share alike segments of the revenue allotment, more funds will be channeled to underdeveloped regions of the country, thus, spurring growth there.
No amount of tax reform will ever overcome ingrained graft and corruption – issues addressed under the Whistleblower and Graft and Corruption sections of Pillars of Federalism.
With autonomy, each state province shall be free to write and implement governance and financial policies. Each state Governor and Legislature will be held accountable by its people – not standing idly by to collect on their share of the National Tax Allotment regardless of how regressive their state policies become.
ABOUT THE AUTHOR: Dr. Crispin Fernandez advocates for overseas Filipinos, public health, transformative political change, and patriotic economics. He is also a community organizer and leader, and freelance writer.