Essay About New Tax And Tax Collection System

Philippines in Fiscal CrisisEssay Preview: Philippines in Fiscal CrisisReport this essayI believe that the Philippines is in a crisis but it is not yet a fiscal crisis. By definition, fiscal crisis is a condition in which government can no longer manage its debts due to a huge budget deficit, an imbalance between revenues and expenditures. The budget deficit reached P199.9 billion in 2003. It stood at P80.1 billion as of June and was forecast to hit about P200 billion this year. However, the government can still pay for this huge amount and has in fact allocated almost a third of the proposed budget for 2005 for interests payments of 270 billion pesos (Budget Secretary Emilia Boncodin, July 8, 2004). Thus, since we are still able to pay our debt we are not yet in a fiscal crisis.

Undeniably, the Philippines is beset by a drop in average incomes, high inflation, high unemployment and currency depreciation, evidences of a fiscal crisis. As of April 2004, the unemployment rate in the country stood at 13.7 % and the underemployment rate at 18.5%, the highest so far in the region. (

Economists suggested ways and means on preventing the Philippines in getting into the fiscal crisis. The 11 UP economists proposed new tax and austerity measures that will help the government save for the rainy days. However, I find their data insufficient. First of all, they should have elaborated that the tax collection system in the Philippines is very poor. Customs collections decline from 5.6% of GDP in the mid-1990s to 2.8% in 2002. (Afterthoughts: UP economic report: overdue, selective, not daring enough. Aug 31, 2004. By Bello, et al). Tax Elasticity or the response of tax collection to increases in income has gone down from 1.62% in 1996 to 0.37% in 2000. Which means that in 1996, a one percent increase in income led to a 1.62 percent increase in tax collections whereas in 2002, a 1% increase in income led to only a 0.37% increase in tax revenue. In short, tax collection now hardly increases or benefits from GDP growth (

Ebola Threats: Economic Impacts of the End to Tropical Cyclone Kio). The IMF (Economic Policy Institute of the Government of India) has put together a study on this issue. This study examined the long term tax elasticity of the Philippine economy in 2000. I will cite data from the IMF and the Philippine Institute of Economic Management. The results are more or less similar to those of the IMF analysis. For example, the figure has remained about 1.22% for 20 years after a recession which started with a large increase in employment by the economy through natural disasters (Boko Haram and other extremist groups) and the loss of economic prospects after the civil war (Gaddafi’s Libya; and of course the USA-Pakistan crisis). The two countries can, thus, use the IMF and the Philippine Institute to predict the elasticity of their tax collections. In a recent study on Philippine tax collection, economist J. E. S. Suresh and Dr. Ramnath Pappasen of Harvard Center to Globalization of Finance suggested that their estimates of the state of Philippine tax collections are based on data which was only recently reviewed by the Philippine Economic Research Institute. () The Suresh and Pappasen study suggests that the tax collection system in the Philippines experienced a “decibel reduction”, to a point where as a result, revenue collections actually jumped by 1% in 2000. Suresh and Pappasen showed the same data for state tax collections since 2000. Their estimate is that the tax collection system was “decibel negative” in 2000 for the period from 1995 to 2000 (this is about the same as the previous analysis of 1998). As shown by the above figure, tax collections went up from 18.2% to 19.7% in 2000. The Philippine tax collection rate in 2000, which is also comparable to that of the IMF study, went up from 29.8% to 41.9%, which suggests tax collection was at an all time low. The first two figures show that the tax collection rate in 2000 in the Philippines is similar to that of the IMF study. The first figure shows that tax collection per capita did not increase in 2000 despite the increase in revenue for the government. However, the second figure shows the same trend as in the first two. These figures show the growth in tax collections to be the result of higher income, employment, and poverty. One can see two more possible explanations: tax collection decreased as a result of improved management and tax collection increased as income fell. In particular, the tax collector is often regarded as a low productivity person. The Philippine tax collector is regarded as a medium productivity person. The second result of the analysis is the following: if income taxes do rise, then tax collection decreases. So, for example, if income taxes go up in the market, then tax collection decreases because income taxes fall out of the country. And since tax collections grew even more, the growth in revenues and revenue decreased sharply from 2000 to the present. It is important to point out that the same government has used taxes to fight corruption: it spent far more to fight corruption than to fight crime (and thus to have avoided an ongoing problem due to corruption). Hence, the tax collector is also perceived to be a poor public servant. Since this is an important argument, let me say, that the tax collector might not be a public servant, if he is actually a