You have to give it to the government of the day to crap out ‘creative’ ways of milking Filipinos of their hard-earned, value-eroded peso.
And there’s no discriminarion mind you, and all the extractions all clothed with legality.
Take the remittances of OFWs for instance. Do you know that now all the money sent back to the Philippines is subjected to a 15% ‘documentary stamp tax’?
Do the math, with some 8 million OFWs sending home anywhere from 300 to 500 dollars each month or more.
While you’re at it, have you heard that taxi cabs which were recently allowed to collect an automatic 10 pesos on the meter once you get off?
But that’s not the catch.The Land Transportation Franchising and Regulatory Board requires each cab to post an official sticker to inform the passenger, with each cabby shelling out up to 200 pesos to buy the ‘official sticker’.
Creative, when you consider that there are anywhere from 20,000 to 40,000 taxi drivers in Metro Manila, apart from the thousands more in the provincial cities.
Popularity: 1% [?]
The government is deducting 15% from my remittances?? Since when?
I wonder which is better: a corrupt government that has money, or a corrupt government that is bankrupt?
Jon, if the money from corruption does not go overseas (or kept in a safe deposit box) and circulates in the Philippines then a corrupt government that has money is ‘better’.
CVJ,
If my information is correct this began in July.
Thanks for the heads up Ding. Strictly speaking, i’m not against a tax on remittances per se. In my blog entry last July, i did propose the same. I firmly believe that we should widen the income tax base since at present, the locally-based middle class salarymen and salarywomen, who are mostly from the Middle Class, are bearing a disproportionate burden of total tax contributions. (This is just my own opinion though.)
I think your source is wrong. The documentary stamp tax for each remittance is 0.15% and not 15%.
This is not “milking”. This is simply to absorb transaction costs.
Perhaps and I’ll post a proper erratum if needed. The point of thematter, really is the principle of the thing, given that the internal revenue guys up until July waived suxh ‘transaction cost’, given the fact the OFW remittances shore up the economy to the tune of at least $8-B yearly and more. I am not an OFW, but I still find the extraction foul.
Ding, i think that your stated principle that OFW’s should be exempt from tax because they ‘shore up the economy’ is not a valid one because anyone who earns an income (e.g. local salarymen or -women and entrepreneurs) also shore up the economy.
1) Truth of the matter is that the government needs revenue. Yes, it may seem that the government is milking the OFWs through the 0.15% DST — that is, if you look at it on the aggregate level. On a personal, microeconomic level, the average Filipino who remits $500 a month will have to pay a meager Php33 which is, in my opinion, just. This is not extraction but rather a source for government expenditures. Now, the question of whether or not it goes to good use is another topic altogether.
2) Offshore banks require about $9 to process transactions. The documentary stamp tax is definitely much less than that. Are the OFWs crying foul? No. Its not about the principle. It all boils down to our distrust in the current government.
3) The Peso is not value-eroded. It was going quite strong up until this year when the economy started to go bad. When the Bangko Sentral refused to intervene on the rapid Peso appreciation last year, did we hear any criticism about that? OFWs (exporters and the BPO industry too) lost a lot of remittance money from the sudden change in the currency market.
4) Lets look at this from the point of view of motives. Why would the government discourage remittances through high taxes? Yes, it would generate more money but the volume of remittances would probably go down too. The government would want OFWs to remit more since it helps the economy through many ways (such as increased consumption, investments, dollar reserves, etc). Therefore, it is not in the best interest of the government to “milk and exploit” OFW remittances.
5) Looking at it through social welfare, Php 33 a month cannot do much good for a person who receives Php24,000 a month abroad. However, Php 33 a month aggregated together ($8 billion * 0.0015 *Php46 = Php552,000,000) can very well contribute to infrastructure building, investments, etc.
cvj,
My premise is not on the matter of exempting OFWs from paying taxes of any kind. My beef, is how the long held practice is changed without notice just quietly, given this government’s ‘bankrupt’ character. You forget how 500,000 doleouts are distributed in Malacanang to special officials? That’s my point.
I will even concede that the 15 pct reference I made may be off the mark, but I stand on the principle of how a government milks the small guys, while letting big fish get away with graft, along with billions in unaudited cash advances and the disposition of ‘intelligence’ funds and ‘contingency’ allotments for political survival objectives. Will write a full post on this soon.
Ding,
The fundamental problem lies in how the “big fish get(s) away with graft, along with billions in unaudited cash advances and the disposition of ‘intelligence’ funds and ‘contingency’ allotments for political survival objectives.”
You wrote the article as if the 0.15% DST is unjust — that the government has no right to collect it. There is nothing wrong with collecting taxes. In fact, it is our moral obligation as Filipinos to give what is due to the government.
There is nothing wrong with the principles of taxation. The problem is in graft and corruption. By itself, there is nothing wrong with the phrase “milking the small guys(which is an overstatement since Php33 of Php24,000 may very well be just a speck of milk and that small guys is an understatement since the OFW sector is a billion dollar component of our economy). What makes the statement profoundly offensive is the part where “big fish get away with graft, along with billions in unaudited cash advances and the disposition of ‘intelligence’ funds and ‘contingency’ allotments for political survival objectives”, correct? So why write about how the government “milks” OFWs? Did it accomplish anything? It just sows discord in an already weary nation.
————–
Apparently, this has long been the practice: “Section 181 of the Tax Reform Act of 1997 says that a documentary stamp tax of thirty centavos for every P200 shall be collected from money coming from a foreign country.” I’m assuming that FCDU’s have long collected this 0.15% DST.
The “reinstated” 0.15% tax issue comes from Western Union’s recent move to collect 0.15% DST. Western Union also claimed that they were the ones who imposed the 0.15% tax in order to comply with local laws. According to them, they were not even questioned by the BIR of their DST delinquencies. Now, this is what’s fishy — not the actual and legal 0.15% collected by FCDUs