The question posed to him in this video was one on employment, but throughout his explanation there was a veritable goldmine of information that made it hard for me to figure out what exactly this particular post was going to be about. I settle on Tax laws, but I will be referring to this particular video many more times in other posts.
So why does tax law excite me so much? Because I’ve been nurturing an idea for the longest time about how to streamline tax laws, and I was pleasantly surprised to see that Gibo shares my thoughts. At about 2:40 into the video, Gibo asks people if any of them properly understood their tax income forms. I can’t see the reaction of the audience but I’ll tell you that I never had a clue what was going on when I was being taxed every month until I did some research into the matter on the BIR website. His point is that our income tax laws are needlessly complicated and that they’re ridiculously high when compared to our neighbors. As a comparison based on ASEAN numbers in Thailand when you make from 0-100,000 baht (1 baht = around 1.4 pesos) income tax is 5% while if I remember correctly (the BIR website is being slow) there’s already a 10% withholding tax on anything below 10,000 pesos. The result of this is that, similar to corruption, this give people more of an incentive to to find loopholes instead of just paying taxes.
So what’s Gibo’s solution? Certainly not to lower income tax right away since as he’s admitted the government needs a larger budget. His solution would be to do research on the tax situation here and figure out a long term plan on lowering income taxes while at the same time (and this is the most important part) increasing consumption taxes like VAT (and Gordon’s text tax). Now before you go berserk and tell me I’m insane for encouraging someone to tax us more here is why it’s an idea that works on multiple levels:
- The cost of collecting specific taxes like income, estate, business, etc. taxes are far larger than the cost of income tax (savings for the government)
- Streamlining the tax collection process means that there will be less chances for petty corruption
- Having a lowered income tax means that people will have more money to spend on things, which means giving our local economy a badly needed boost
Of course a fine balance must be struck here, and the math needs to work out in a way that ensures the overall result will be beneficial to the country, especially to those most in need. But out of the box ideas like this are the type that inspire me to follow someone.
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