Showing posts with label Bjorn Tarras-Wahlberg. Show all posts
Showing posts with label Bjorn Tarras-Wahlberg. Show all posts

Friday, June 06, 2014

Tax Cut 19: Letter to Sen. Sonny Angara Re. SB 2149

This is my letter to Sen. Sonny Angara today, sent to his sensonnyangara@yahoo.com. His other email ad, edgardo.sonny@gmail.com as indicated in the Senate website, is bouncing.

Photo is from his facebook profile. I will post this letter in his fb and twitter accounts as well.
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06 June 2014

Sen. Sonny M. Angara
Senate of the Philippines
Pasay City

Dear Sen. Angara,

We support your intention to simplify and reduce the number of tax brackets for personal income from seven to five, and reduce the top marginal tax rate from 32 percent to 25 percent by January 2017, as contained in your SB 2149, “An Act Amending Section 24 of the National Internal Revenue Code of  1997 as Amended, and for Other Purposes”.

We would like to suggest further simplification of the income tax system by adopting a low, flat (single rate) tax with no exemption/deductions policy, for incomes above P100,000 a year. We suggest the following rates:20 percent by 2015 or 2017;  15 percent by 2022;  10% by 2027, further down to five percent by 2032.For annual income below P100,000, no income tax shall be collected.

A low, flat or single rate tax policy has the following advantages over high and multiple tax brackets:

(1) It is easy to administer and compute since there are no exemptions and deductions allowed.
(2) It retains the spirit of progressive taxation. At 20 percent flat tax, someone earning P1 billion a  year will pay P200 million while someone earning P300,000 a year will pay only P60,000.
(3) It allows fixed-income earners to experience de-facto “pay rise” as a result of tax cut. Many ordinary government employees – teachers, health workers, soldiers, policemen, many others – will support this and the legislators who will sponsor this initiative.
(4) It expands collection from consumption-based taxes like VAT and excise tax as “extra income” from tax cut is generally spent on more household needs. People often hide their true income but they flaunt their consumption, their new car or house, new cell phone or laptop, new shoes or watch, and so on.
(5) It reduces “brain drain” as the projected local take-home pay of Filipinos planning to work abroad will become larger, while foreigners who dislike high income taxes in their home countries will be attracted to come and do business in the Philippines.
(6) It reduces the urge for tax evasion.

Overall tax collection by the government may even rise as (a) wider income tax base is tapped and (b) bigger collection from VAT and other consumption and transaction taxes are collected.

The low flat tax policy is not new and more countries are now adopting it as a form of “tax competition” with some neighbour countries. According to Bjorn Tarras Wahlberg, Secretary General of the World Taxpayers Association (www.worldtaxpayers.org), there are now 29 Countries in the world with low, flat tax, both for personal and corporate income:

(a) 10 Percent Flat Tax:  Kyrgyzstan (since 2006),  Kazakhstan (2007); Macedonia (2007); Mongolia (2007); Albania (2008); Bulgaria (2008); Nepal (2008);  Serbia (2008); Andorra (2011).

(b) 12 to 13  Percent: Macau 12%; Belarus (2009) 12%*; Russia (2001)               13%.

(c) 15 Percent: Hong Kong; Lithuania (1994); Iraq (2004); Montenegro (2007); Mauritius (2007); Czech Republic (2008); Malta (2011).

(d) 16-17 Percent: Romania (2005)                and Hungary (2011) 16%; Ukraine (2004) 17%

(e)) 20-25%: Georgia (2005) (incl..social tax of 8%) 20%, Jersey and Guernsey (1940) 20%;
Slovakia (2004) and Estonia (1994) 21%; Latvia (1994), Jamaica (1984), and  Trinidad & Tobago, 25%.

Government should aim for a high or large tax base. Instead of aiming to tax 50 or 200 billionaires in the country, it should aim to have 1,000 or 10,000 billionaires. It can happen only if government and the public will stop demonizing and penalizing billionaires and attract them instead. A billionaire should have several companies, which creates lots of jobs and more middle class taxpayers; they will have big houses, which creates jobs in construction and house maintenance, and create more taxpayers.

We hope you will consider this proposal. We are ready to attend your Committee Hearings on this subject if you invite us.

Sincerely yours,


Bienvenido “Nonoy” Oplas, Jr.
President, Minimal Government Thinkers, Inc.
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See also:
Tax Cut 15: Some Resistance to Reducing Personal Income Tax, May 04, 2013
Tax Cut 16: Conserving Fishery Resources by Taxing Demersal Fish Catch?, May 27, 2013 

Tax Cut 17: BIR vs. Physicians, March 06, 2014

Tax Cut 18: On 10% Flat Tax, Greco Belgica and GDP Growth, March 27, 2014

Tuesday, January 22, 2013

Tax Cut 14: APTU Meeting in Bangkok, March 1-2

The Asia-Pacific Taxpayers Union (APTU) meeting will be held in Bangkok this coming March 1-2. I got this notice and invite from a good friend, the Chairman of APTU and Sec-Gen. of the World Taxpayers Association (WTA, http://worldtaxpayers.org/), Mr. Bjorn Tarras-Wahlberg.

I met Bjorn first time in Seoul, S. Korea in October 2006 for the APTU meeting. I was then an official of the Philippine Taxpayers Union (PTU) headed by Mr. Veredigno "Vernie" Atienza. Photo here from left: Bjorn, Grover Norquist of the Americans for Tax Reforms (ATR, http://atr.org) during the Pacific Rim Policy Exchange in October 2009 in Singapore.

I realized I could not do my function well with PTU as I was also busy with Minimal Government Thinkers, so I told Vernie that I have to leave PTU but will work with it in its main advocacy -- to have a low, flat income tax (corporate and personal) in the Philippines. Abolition of income tax is actually possible as the government has dozens of various consumption-based and business taxes and fees, both national and local government units.

Bjorn came to Manila a few  times in 2009 and 2010. I was able to join him and Vernie in his meeting with former DOF Secretary Gary Teves (my former boss in Congress and in Think Tank, Inc.) and at Bjorn's talk at the Rotary Club of Rizal West, among his other activities here.

Additional photo also during the Singapore conference in 2009, Mr. Kim Sun-taek (middle), President of the Korea Taxpayers Association (KTA); the girl beside her was his English interpreter as Mr. Kim does not speak English. Next to Mr. Kim is Jargal Dambadarjaa of the Mongolians for Fair Taxes and Wise Spending, and Ms. Jamie White, then head of the Grassroot Institute Hawaii.

I told Bjorn that I cannot attend the Bangkok meeting this coming March due to my limited financial resources now. But I will try to blog and write about this important meeting. Below is the conference agenda and other details.
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Asia-Pacific Taxpayers Union Conference 1-2 March 2013
                      Hows to get Members & Money

                                  Pan Pacific Service Suites,
                  Eight Thonglor, Sukhumvit Soi 55, Bangkok

All taxpayers associations in the world, and their specialists, are invited to the Asia-Pacific Taxpayers Union Conference in Bangkok for a 2-days meeting, Friday-Saturday March 1-2. 
No Conference Fee.

Arrival: Thursday Feb 28. Welcome Drinks from 7 p.m. followed by dinner.
Departure: Sunday March 3 or when it suites you. Earlier arrival and longer stays are possible.

Regional meetings for taxpayers associations in Asia and the Pacific have taken place since 1995. In this part of the world you find taxpayers associations in Australia, China, Georgia, Hong Kong, India, Indonesia, Japan, Kazakhstan, Kyrgyzstan, Malaysia, Mongolia, Nepal, the Philippines, Pakistan, South Korea and Turkey.

Agenda: Friday 1 – Saturday 2 March

1. Presentations with information of latest achievements from participating associations
2. The 100-years history of taxpayers associations (Mr Bjorn T-W, World Taxpayers Associations
3. “Replace Income Tax by Consumption Tax” (Mr Bjorn T-W)
4. Protect the Flat Income Tax - now under fire in many countries (Mr Bjorn T-W)

     How to get Members & Money
5. Creating a Strategic Plan that Works (Mr Troy Lanigan, Canadian Taxpayers Federation) 
6. Different Techniques for Getting Members (Mr Bjorn T-W)
7. Empower your Donors to Fulfill Their Wishes - the different fundraising in Canada (Mr T. Lanigan)  
8. How Beijing Taxpayers manage to get 170.000 members and how extensive service can finance the organization,
now developing independent taxpayers associations all over China (Mr F. Liu, China)
9. How South Korea has achieved 1.300.000 internet members and how these are used and managed (Mr. Kim Sun Taek, Korea Taxpayers Association)
10. How a taxpayers association can work in developing countries (Mr Otieno Igogo, Tanzania Taxpayers)

      Better communication
11. How to Get Free Publicity with Creativity. (Mr Raymond Ho Man Kit, Momentum 107, Hong Kong)
12. Establishing a better Communication system between all APTU-members (Mr Fengjiang Liu, China)

13. Opportunity for paying APTU-members to communicate with members in other countries (Mr Fengjiang Liu, Beijing Taxpayers)
14. News in the Chinese tax system (Ms Qiao Shuping)

      Exchange of printed material
15. Exchange of magazine, books and other material between the member associations.
      Bring your samples to Bangkok (Mr. Fengjiang Liu, Beijing Taxpayers)

      Formal Issues & Elections
16. Report from the World Taxpayers Conference in May in Kiev. Words of welcome to the World Taxpayers Conference in Vancouver, Canada 29 - 31 May 2014 (Mr. Troy Lanigan)
…. Other issues

Hotel & Conference in the same building
15 min walk from Sky Train Station “Thonglor” (Close to stations Asok and Nana).
We offer reduced hotel prices incl. taxes & service, big breakfast, internet, gym and pool etc.
- Executive Suites (Studio 37 sqm) Baht 3.500 net/night (USD 117).

- One bedroom Suites (61 sqm) Baht 4.200 net/night (USD 140).
Cheaper hotels are also available. Urgent booking of hotels are requested.
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See also:
Tax Cut 10: Mongolian Taxpayers Movement, July 28, 2009
Tax Cut 11: US Tax Cuts, Retain Them, September 18, 2010
Tax Cut 12: Removing Taxes on Foreign Airlines, April 02, 2012
Tax Cut 13: Remove the Excise Tax on Oil Products, July 04, 2012

Abolish Income Tax 5: Consumption taxes, other government fees, November 25, 2009
Abolish Income Tax 6: Income tax and VAT trade-off, February 08, 2010
Abolish Income Tax 7: Rene Azurin, Peter Wallace, John Mangun, August 19, 2011
Abolish Income Tax 8. From low flat tax to zero income tax, September 30, 2011

Thursday, May 05, 2011

APTU meeting in Bangkok, part 2

In Part 1 of this discussion, I briefly introduced the Asia Pacific Taxpayers Union (APTU) and some of its member-organizations, and the World Taxpayers Association (WTA).

I was not able to attend the APTU meeting in Bangkok last week due to financial constraints. And it was good that I did not go there because my two daughters got sick and I have to bring them to a doctor on those days that they were meeting in Bangkok.

Mr. You of Japan Taxpayers Association (JTR) sent me this group picture below.


From left, 2nd row: Ms. Gulyaim Nurbekova of Kazakhstan Taxpayers Association, Mr. You of JTR, Mr. Bjorn Tarras-Wahlberg, WTA Sec-Gen. and APTU Chairman, Mr. Fengiang Liu of Beijing International Taxation Research Society (BITRS), Mr. Raymond Ho of Momentum 107-HK, Mr. Jaya Naidu from Australia. In front is Mr. Kim SunTaek of Korea Taxpayers Association. Beside him are English translators of Mr. Kim, Mr. Liu, and... I don't know the 2 other ladies :-)

From several email exchanges where I was cc'd, it was a good meeting, good. Below is a portion of the presentation made by Bjorn.


Many countries are now competing at 10 percent flat income tax rate. Since this trend in tax competition is likely to continue, not reverse, then we should be seeing income tax rates going down to 6-7 percent or lower in some countries in the coming years.

Below is another slide from Bjorn. Georgia is stepping hard on the tax competition pedal.


Next year, Georgia's personal income tax will go down to only 7 percent and it will abolish taxes on dividends and interest income. It has also abolished capital gains tax. All other things being equal, it should be safe to assume that more and more foreign investors and professionals will be trooping to Georgia to do business there.

The governments of the Philippines and many other countries should think hard of this tax competition currently on-going. Higher taxes will either discourage businesses, or businesses will still come provided various loopholes and tax credits can be availed of. Or higher taxes will encourage government corruption, more tax cheating and avoidance, with the likely connivance of several officials and personnel of tax collection agencies themselves.

Monday, December 15, 2008

Tax Cut 9: Flat Tax, 26 Countries Now

A friend, Bjorn Tarras-Wahlberg of the World Taxpayers Association (WTA) sent me this updated list of countries that have flat, low income taxes.

Flat income taxes 2009
from 1 to 26 countries in 15 years

Kyrgyzstan (since 2006) 10%
Kazakhstan (2007) 10%
Macedonia (2007) 10%
Mongolia (2007) 10%
Albania (2008) 10%
Bulgaria (2008) 10%
Serbia (2008) 10%
Georgia (2005) 12%
Macau 12%
Belarus (2009) 12% New
Russia (2001) 13%
Hong Kong (1947) 15%
Ukraine (2004) 15%
Iraq (2004) 15%
Montenegro (2007) 15%
Mauritius (2007) 15%
Czech Republic (2008) 15%
Romani (2005) 16%
Slovak (2004) 19%
Jersey and Guernsey (1940) 20%
Estonia (1994) 20% Lowered
2010 19%
2011 18%
Iceland (2007) 22,5%
Lithuania (1994) 24%
Jamaica (1984) 25%
Latvia (1994) 25%
Trinidad & Tobago 25%

Why flat income taxes?
1. Simple and fair
2. Promotes economic growth
3. Promotes tax competition
4. Neutral to inflation

Why mostly in the new democracies?
1. Liberal values with more individual freedom
2. Wish to get rid of socialistic high taxes
3. Wish to reduce the black economy
4. Wish to promote economic growth and increased tax revenues with lower taxes (see Russian example)
5. No heavy package of social welfare

Copyright: Björn Tarras-Wahlberg, CEO, World Taxpayers Associations 2008-12-05. Any news to: BTW@worldtaxpayers.org +46 70 325 00 11.

Meanwhile, I am posting 2 short papers on taxes early this year.

(1) Taxes vs. Subsidy

May 26, 2008


A Malaysian friend, Wan Saiful Wan, head of Malaysia Think Tank London, shared with us a news story, "Making the rich pay more for fuel", May 23, 2008. The article went this way:


"Malaysia's rich will have to pay more for heavily subsidised items including fuel as part of a new two-tier scheme to reduce government spending, reports said today. "We need to have a good system for those who deserve the subsidy, such as the lower and middle-income groups," Second Finance Minister Nor Mohamed Yakcop was quoted saying by the Star daily."

I think the headline was wrong. It says "Government wants to tax the rich" when the story says the "government wants to reduce subsidy to the rich". These 2 -- taxes and subsidy -- are different things. The first is taking money away from the people. The second is giving money to the people, the money coming from various taxes.

My take on this and almost any other issues on other sectors is that subsidies should be kept to the minimum – and taxes should be kept to the minimum too. You encourage something, you'll have more (consumption) of it; you discourage it, you'll have less of it. That's one of the "7 Principles of sound public policy" made by Larry Reed. So you provide more fuel subsidies, you encourage more fuel consumption. You tax oil, you discourage more fuel consumption.

If oil taxes around the world are removed, or at least drastically cut by one-half of their current rates, especially in European and North American countries, retail price of oil will drastically go down, which will encourage more fuel consumption, which will result in ever-higher world crude prices, perhaps shot up to $200 a barrel within a year or less. But at least people will not complain of the artificially high retail oil prices caused by oil taxes. They can complain of high retail price because of the high crude oil prices, high cost of refinery, high cost of transporting refined oil, etc.

If government revenue from oil taxes will decline if not evaporate, where will government get money to build new roads, or improve and expand existing ones? Road, especially expressways, should be on user-pay via toll roads. Roads can be privatized. So that the more you use the road, say you drive 100 kms a day on average, the more you will pay toll fees. If you use less, say only 20 kms a day, you pay less. This still discourages high fuel consumption. The rich who have more meetings, more places to visit and work, will pay more on toll roads and fuel. There is still "equity" there.


(2) On Tax Registration

April 01, 2008

Many firms and enterprises in developing countries operate in the informal sector or the "underground economy". There's one paper on Bolivia that says that on average, formality leads to higher profit. This is especially true for mid-sized firms but not for both smaller and larger enterprises.

Many small- and micro-level enterprises in developing countries indeed remain to be informal. This is because business registration in those countries are very bureaucratic and time-consuming, and the fees are plentiful too.

For medium-level enterprises, formal business and tax registration helps increase profit because the owners and managers of such enterprises can concentrate on their business, and worry less on extortion and harassment by the state's tax and trade bureaucrats.

* See also Tax Cut 8: Comparing HK and Philippine Taxes, March 04, 2008

Wednesday, December 06, 2006

Tax Cut 3: Flat Tax Countries in the World, 2006

Below are countries which have low, flat income tax; parenthesis is year of introduction.
Note the "tax competition" sweeping eastern Europe.

Kyrgyzstan (2006) 10%
Kazakhstan (2007) 10%
Georgia (2005) 12%
Ukraine (2004) 13%
Russia (2001) 13%
Iraq (2004) 15%
Macedonia (2007) 15%; by 2008, 12%; by 2009, 10%
Romania (2005) 16%
Hong Kong (1947) max 16%
Slovakia (2004) 19%

Jersey and Guernsey (1940) 20%
Estonia (1994) 26%
by 2006 23%; by 2007 22%; by 2008 21%; by 2009 20%
Latvia (1994) 25%
Lithuania (1994) 33%
by July 2006 27%; by 2008 24%

source: World Taxpayers Association (WTA, www.worldtaxpayers.org)
Thanks to Bjorn Tarras-Wahlberg, the Sec-Gen. of WTA.

If the same type of "tax competition" will happen in Asia, then it will supplement the environment of less-regulated economy, at least compared to Europe, and should result in more dynamic economies.

But many Asian governments also aspire to be like the welfare states of Europe, paying less attention to the fiscal burden of such policy and just think more of the votes they can get during elections.