Narrative Report

Submitted by:Joshua Liwanagan

Josephine Vitto

Ashley Villanueva

Jhonelle Maano

Apple Nambio

Jessa Mendoza

Joanne Mampusti

Jhoe Romil Frias

Noe Frias

EDUCATIONAL SYSTEMS TECHNOLOGICAL INSTITUTE

Murallon, Boac, Marinduque

Applied Economics

Practicum No.1: Taxation System in the Philippines

INTRODUCTION: TAXATION. A means by which government finance their expenditure by imposing charges on citizens and corporate entities. It is when government requires citizens to pay a certain amount of money to help fund public institutions. Government use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest or home montage loans results in greater construction activity and generates more jobs. Throughout the history of income tax, capital gains have been taxed at lower rates than ordinary income. Since 2003, qualified dividends have also been taxed at the lower rates. Some also claim that lower tax rates for capital gains spur growth, encourage risk-taking and entrepreneurship, offset the effects, and prevent “lock-in” (the disincentive to sell assets). Lower tax rate disproportionately benefits the wealthy and encourages tax sheltering schemes.

We conducted an interview to the ff. persons below by asking their views.

Close Encounter with the Philippine Taxation System and its Current Issue

A. The current administration plan to lower the tax rate in Corporate and Personal income, Are they in favor or not? Why? B. For them, what are the possible effects of this action?

FORMER PRESIDENT OF THE COUNTRY

President Noynoy Aquino “If we lower income tax rates, revenues will be smaller while the

deficit will be wider. The widening deficit will be negative factor when credit ratings agencies rate us.” (Sept. 15, 2015) . So this is his response to proposals by some legislators that he is not convinced that lowering tax rates would be beneficial to the country. To assess this claim, let’s put aside (from now) our skepticism that the administration needs more funds in an election year to support it’s effort in perpetuating it’s hold on power.

ONE OF THE 12 SENATORS OF THE CONGRESS

Senator Juan Edgardo “Sonny” Angara (chair of the Senate Ways and Means committee)

Welcomed the decision of Senate and House leaders to prioritize the tax reform bill as a “sign of progress” since they have been initially reluctant to consider proposals to lower tax rates. In an interview in Makati City, Angara has filed a bill seeking to adjust individual income brackets starting next year. By 2017, Angara’s bill seeks to lower tax rates to 10%-15% for those earning P20,000-P70,000 and 25% from the current 32% for those earning over P1 million.

ONE OF THE 250 REPRESENTATIVES OF THE CONGRESS

Marikina Representative Romero “Miro” Quimbo (chairman of the House Committee on Ways and Means)

He said the law cutting income tax rates would be passed by 2015 after congressional leaders decided to prioritize the legislation of a comprehensive tax reform bill.“Support for TRIGR (Tax Reform for Inclusive Growth) movement does not only emanate from the citizenry. My colleagues in the legislative have likewise expressed their support, even clamor, for tax reforms,” Quimbo said in a statement. He added “A fair and equitable tax system is a cornerstone of inclusive growth. If we really want to achieve inclusive growth, we cannot disregard the plight of the tax payers and continue bleeding them dry through our flawed tax system.” Quimbo said only 15% of the total collections of the individual income taxes was paid self-employed individuals and professionals, while the bigger chunk of 85% comes from the compensation income earners.

LGU EXECUTIVES

Mrs. Luz M. Luarca (Brgy Captain of Murallon). She said that “I am favor because the simple employee will enjoy

their salary unlike the taxes now, they are paying taxes even their salary is in a small amount.” On the other hand the effect of this action plans the income will lower. The government projects will be affected.

FORMER BIR SECRETARY

Kim Henares “I was nothing against lowering of taxes but I felt that tax reform

was more important.” Salaried employees are automatically deducted withholding taxes and end up paying 32% of their income as taxes. On the other hand, the very rich rarely pay 32% of their total earnings as taxes. It is only tax evasion but the tax structure. For example, dividends, a form of income monopolized by the very rich , are taxed at a much lower rate than a salary of clerk.

BIR ACCOUNTANT

Mrs. Cornejo “I am not in favor because tax servesas a fund for our country

and it supports every facilities like hospitals, roads, etc.” We can’t achieve the expected economic growth if this tax rate will be lowered.

ECONOMIST FROM KNOWN UNIVERSITIES INT THE PHILIPPINES

Benjamin Diokno “I am favor to lower the tax rate but loss revenues due to tax

that will be offset the expanding value added tax base.” We aiming to remove the exceptions not related to agricultural, health, education and the financial sector.

COMPANY/CORP./ BIG SCALE BUSINESS OWNER IN THE PROVINCE

Yamaha Boac “I am favor to lower tax rate because as a worker that has an

average wage it will be a big help” On the other it the possible effect of lowering tax rate maybe the prices of other products may increase and it may affect the daily lifestyle of the average Filipino people.

SMALL SCALE BUSINESS

Personal Collection “Yes, because it will give benefits to our small company and to

every employee we have especially those singles.” But maybe the possible effect of this action our income will be lower too.

GOVERNMENT EMPLOYEE WHO IS REGULARLY PAID HIS/HER ANNUAL TAX DUE

Mrs. Maricel M. Vitto (Tiguion National High school teacher – Advisory Class of Grade 8 Students).

“Yes, I am favor of lowering the tax rates because the tax supposed to be a big help to the expenses needed in the house everyday. The effect of this in our government will affect the project that they’re going to make. The funds will decrease use in building different infrastructures, also in paying public services etc.

AN ECONOMIC TEACHER/INSTRUCTOR

Mrs. Maricel M. Vitto (Tiguion National High school teacher – Advisory Class of Grade 8 Students).

“Yes, I am favor of lowering the tax rates because the tax supposed to be a big help to the expenses needed in the house everyday. The effect of this in our government will affect the project that they’re going to make. The funds will decrease use in building different infrastructures, also in paying public services etc.

4 STUDENTS IN ESTI

Annacel Ogayre (Senior Highschool- ICT) ”I am not favor because the funds come from taxes is used for

the projects and used as a salary for the employees. Also it is used to help indigent families and in case of calamities came. As of now, we need more fund because of the continuos increasing of the employees. This tax is beneficial to all of us, to help unemployed and to the assurance that our economy will grow if all citizens pay all their taxes precisely. Lowering tax rates results to the breakdown of our economy, haven’t enough employees, haven’t enough funds to help the citizens.

Lyka Herrera (Senior Highschool – ICT) “I am favor because when the current administration lowers the

tax rate it will help to reduce poverty. Most of the earnings of people who are not wealthy is being decrease just to pay for their tax rate. So once the tax rate of people is being lowered people will have much money helpings them to supply their needs and to adopt in the changes in the world.” On the other

hand once it is lowered the budget for improving infrastructures will be lessen causing our country not to be fully developed because of indefinite amount of budget for constructions and others.

Kim Bustamante (Grade 10) “I am not favor because tax is a reason why our economy is

growing and increasing. Also it is used for the pensions and free education to the indigent families. Tax is served as a processor why we have a normal life and job. Also Tax is used for the infrastructures, transportations and for professional’s status.” If the government lowered the tax, there are no enough funds to support educations, other programs and projects for the progression our country might be. The livelihood would be affected.

Julie Ann Malitao (Grade 10) “I am favor to lower the tax because it will give benefits to every

employee to fully budget well their salary they received because they’re doing their best to be as productive as their can so the government need to increase their salary with a low tax.” On the other hand, The effect of lowering tax are: Growth rate of our economy will be decrease, haven’t enough fund to support poor families and also for the infrastructures they’re going to build.

CONCLUSION: In the interview we conduct we observe that most of them are not

aware about what is currently happening in our country especially in terms of lowering the income and corporate tax. Some of the answer we’ve got didn’t come on the person we interview. They asking to their co-employee and even on us of what would they put on the questionnaire. We also observe that they have different opinions about this issue but most of them agreed in one reason and that was they will receive a large income compare to their recent income. And therefore we conclude that this issue have a good and big benefits to every taxpayers.

PHOTOS TOGETHER WITH OUR INTERVIEWEE

GLOBE OFFICE IN MURALLON, BOAC

BRGY BULIASNIN AND BRGY TANZA