Photo is from his facebook profile. I will post this letter in his fb and twitter accounts as well.
-------------
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.
Columnist, http://interaksyon.com
Author, Health Choices and Responsibilities
Author, Health Choices and Responsibilities
-----------
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
No comments:
Post a Comment