Intruding upon one of the most debatable issues of Gloria Arroyo’s economy – one exponentially escalated by the Expanded Value Tax (E-Vat or R.A. 9337) additive he had aggressively pushed through congress – former National Economic Development Authority (NEDA) Executive Director Ralph Recto released a bomb with clearly populist ordinance. To the immediate consternation of the Energy Department, Recto announced that the oil pump prices across the archipelago were over-priced by as much as Php 8.00 per liter.
When it exploded, it exploded indiscriminately. The most incisive shards sliced through the Energy Department’s vulnerable credibility gossamer. Not only was the department self-declared impotent against oil price increases, it was evident that what powers the deregulation statutes empowered it to prosecute unreasonable pricing, it could not employ. Never mind that it had a well of relevant data that, when intelligently analyzed, backstops its charge, the department appeared clueless as to what reasonable fuel pricing was.
It was not easy to take sides between the Department of Energy and the NEDA. One, headed by a thrice-previously bypassed appointee, was popularly condemned ineffective and incompetent. The other, incredulous.
Initially, Recto’s accusation of a Php 8.00 oil price fudge was an absolute, a Euclidian Frankenstein clearly computed. But how credible is it?
After his name had been appended to controversial tax impositions, to political analysts, Recto had lost the trust of the general constituency and was handed his just deserts when flatly rejected for another term at the Senate.
E-Vats cumulative infliction was substantial. Recto’s R.A. 9337 removed exemptions on the importation of petroleum and imposed additional collections on electricity sales thus exponentially escalating universal input costs and dumping the whole shebang on the already victimized consumer.
The counterpoint is that, for Arroyo’s bureaucracy, the run-away deficit, self-inflicted through unproductive spending, was somewhat tamed. From a deficit of Php 167 billion prior to the E-Vat, the tax provided a respite until revenue collections fell below 70% efficiency and Arroyo’s over-budget spending resurged to Php 188 billion, approaching Php 255 billion before the yuletide compels official shopping sprees, more dining and pigging out.
That the E-Vat is inflicted on even mundane school supplies among shoeless schoolchildren was not lost on voters. It was also slapped on gas royalties (a tax on a tax), oil products, electricity and gross receipt taxes (all price multipliers) thus increasing aggregate prices despite the appeals that these be exempted.
Recto’s Php 8.00 fudge is now a permanent fixture of political polemic. Special interest groups quote it to demand from oil companies the opening of their books. Others use it to lobby a return to oil regulation. Militants love it. It looks good painted on bright red banners. While the DOE feigns cluelessness, to test its accuracy, let us regenerate it in a virtual Petri dish
Recto’s Php 8.00 oil price fudge is based on prevailing pump prices between the end of the first quarter and into the first weeks of April 2009 when Dubai Crude was US$ 50 a barrel. Those pump prices averaging at Php 40.00 per liter last April were benchmarked against pump prices between February and March 2005.
Using Dubai Crude as the basis, in February 2005 Dubai Crude was US$ 39.70 per barrel while in March 2005 it rose to US$ 45.84 per barrel. Pump price averages for that period rose respectively from Php 27.37 per liter in February to Php 29.22 per liter in March or an average of Php 28.30 before E-Vat. After FOREX differentials, the logic to compare 2009 to 2005 is NEDA’s. Impose E-Vat and the average pump price increases to Php 31.70 per liter.
Compare Php 31.70 to the average pump price in April 2009 of Php 40 per liter and, viola!, the difference is Php 8.30 or a scant Php 0.30 off Recto’s sound byte. (To derive NEDA’s exact Php 8.00 amount, use the median instead of the average)
Never mind inventory pricing, timing and forward hedging. Never mind different tank farm capacities among oil companies. Never mind those who import refined fuels and not Dubai Crude. Never mind benchmarking on Dubai Light Sweet applies only to products refined by two refineries. Direct importations of refined can be based on the heavier grades. Never mind all other factors save for overly simplistic two-dimensional straight-line iterations. Is it too much to expect that agencies apply more than one brain cell when declaring anomalies?
Never mind further that alternate methods in determining the price fudge yielded lower differences between Php 6.00 and Php 8.00 per liter. It is disingenuous to cherry-pick the price with the most alarming difference simply to prosecute the argument of an overprice.
Again, it is a question of credibility. If this is the kind of mediocrity behind brazenly declaring a Php 8.00 fuel price fudge, one wonders what crappy fiddle-faddle analysis had backstopped legislating the E-Vat that continues to wreak havoc on family incomes and aggregate prices.
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Hi Dean,
I assume this was Recto’s more specific report on the disparity on oil prices (link to NEDA PDF file on Recto’s report)
Dear Nick,
Yes it is. Nasa website niya and it was presented before the Senate.
Dean
Report states the following:
NEDA used historical data to estimate pump prices of gasoline and diesel on April 16, 2009.
It took the following steps:
First, NEDA converted the current DCO price in US$/bbl to PhP/bbl using current forex rate.
It then sought periods in the past when the monthly average peso equivalent of DCO price was the same or nearest the peso price of DCO
on April 16, 2009. NEDA used an oil, gasoline and diesel prices reference table in identifying the periods. The reference table used historical DCO prices, foreign exchange rate and monthly
average pump prices as sourced from DOE.
NEDA then interpolated using the April 16 DCO peso price vis-à-vis the DCO prices and average pump prices of the identified reference periods.
Lastly, NEDA added 12% VAT to the resulting figure for both gasoline and diesel but subtracting excise tax on diesel.
The excise tax reduction is due to the subsidy granted by the government for public utility vehicles that they assume runs on diesel.
An excise tax is a tax to control the use of a substance. Why diesels have an excise is beyond me.
Dean
Any way, I was a bit surprised to find out, looking at their calculations that they used straight line interpolation for a real world application, however aside from that, I am still left wanting as to a competing analysis and other estimates using other reports and studies regarding probable price disparities in pump prices.
Recto’s report cites four methodologies, Ocampo’s seems to yield the lowest average of around 6/liter in price disparity.
And indeed, looking at Recto’s report, he has looked for the higher number for his press release and statement.. but.. my point, in all of this is that there’s still a price disparity.
I don’t condone cherry picking especially when it comes to numbers and data, but should disparities in oil prices even reach that high of an amount? A comfortable range for me would probably be from 2-3/liter, leaves room for market forces, but still low enough for comfort.
I do have a last question, bare with me too. Are we the only nation experiencing such a disparity, and are there studies pointing to the fact that there are other nations with even higher disparities in pump prices?
Dear Nick,
Sorry for the late reply. Yes, I used the NEDA data from their website and discussed this with the NEDA staff that had done the analysis.
They could have used data provided them by the Energy Department on the inventory levels of each of the oil companies. The data on inventory which included shipping reports, manifests and even delivery schedules was raw and did not have formulae. The DOE could have come up with a pricing model but they didn’t.
You are right about the Php 2.00 per liter disparity among those who import refined and those who refine like Shell and Petron. According to Chyevron officials who I discussed this with (they used to refine, although relatively, inefficiently, compared to Shell and Petron), the differentials would be in that range.
And yes, Recto used the higher amount when he could have used Php 6.00 and then from there imputed inventory costs.
Sorry, I have to research to answer your last question. It would depend on their mix of imported refined and refined, tank farm capacities for each and distribution costs. Ours is relatively higher since our tank farms are concentrated in Batangas, Subic and Bataan.
Flying V has a major tank farm in Mindanao but they sell a mixture of imported refined and local (Palawan) refined.
Regards,
Dean
We dont have any Energy Plans or Energy Programs to meet the up
and down prices of Energy in the World market. Other industrialized
countries have their plans. The Philippines is lead by Secretaries
and Leaders who are incompetent; not fully educated in the fields
they are leading; and are mostly political appointees. The Secretary
of the Energy is a former military officer. What can a man of war
know anything about the energy market ? He is trained and educated
to fight wars. So, he does not know how to handle the fluctuations
of the energy market. He does not even have a comprehensive plans
to make the Philippines energy independent. He is a blind man, leading a blind population. We all now fall in the pit!
Dear Haydn,
I agree with you on the competence or incompetence of Reyes. He however boasts that he is a graduate of AIM and the JFK School at Harvard (short courses).
I consulted for him during his first two months as Energy Secretary. To say the least, it was two months of shouting and posturing. After that we stopped talking to each other.
The Philippines does have an energy plan and it is a thick book published by the DOE. It isn’t followed and few have read it. Including our energy officials.
Regards,
Dean
It is in the implementation that matters. Also its
results. You can have plans, as thick as your bonehead
skull. But, if you dont use it. What is the use?
Just for the sake of having an Energy Plan?
BTW Haydn,
There is little respect for Angie among the battle-scarred. He is known as a “desk general” and has earned little of his stripes in the field.
Also, his classmates and professors described him as dependent on others when he was a student.
He has a terrible bark though.
Dean
In the corporate world. It is how deep is your bite that matter. Not how loud you bark.
The fellow seems to bark loud; and cannot bite. We
dont care where you graduated; or what honors you
received. We care about your performance NOW. How
you delivered the goods to us!
Dear Hyden,
Come to think of it, there must be a “Hyden” reason that GMA continues to keep him.
The real reason must be very interesting.
Probably frightening too.
Dean
On another topic related to oil, are the refineries in the Phil. able to process heavier crudes? There is talk of building a heavy oil pipeline from Alberta to BC and once that is built, heavier crude oil can be shipped to Asia most notably China. With the $1.9 billion offer of Petro-China to Athabasca, China just validated their belief in the oilsands of Alberta to secure their energy supplies. Our company holds vast acreage of oilsands and I can easily convey any expression of interest coming from Philippines. Dean, how can I get a hold of you?
Hi Rosa,
No. The only grade that we can refine is Light Sweet. The Palawan oil is similarly light sweet. Some companies in the Philippines can process Palawan Light by simply have it pass through filters and a centrifuge. That produces a fuel that is heavier than bunker but can be burned by a good marine diesel engine.
Regards,
Dean
Dean,
Dear Cocoy,
If you look at a lot of the things around the way government is governed, an “assault on reason” is not only apropos, it is probably the rule.
Haydn is right.
Too many appointees installed for reasons other than to govern. Reyes started out in Defense, then Local Governments ( the equivalent of the Interior Department), then Environment before Energy.
In each, he was not confirmed and yet he kept of being reappointed.
How’s that for “assault on reason”.
Regards,
Dean
I guess that draft bill will go into the back burner until the next Congress, if ever.
Thanks Dean, most enlightening.
Dean,
Slight diversion here, re. VAT. I have rather considered it a good tax because it taxes value, as opposed to fee-taxes levied by the government for services, that impose restrictions on access to courts, police, and good service. You seem to think otherwise. Without regurgitating the whole discussion about VAT (which I did not witness when it was being debated), what is your take on it, and taxes in general.
Heh . . . just picking brains here today, and yours is a good one to pick.
Joe
Dear Joe,
I am a believer in VAT. I am also a believer that where there are exmptions to VAT, the cascading effect is worse and the weight carried at the consumer end is heavier. There is a mathematical model that shows that which I provided Mar, Jesli Lapus (he headed the House Ways and Means Committee) and Serge Osmena before.
I just have to find it and reprint it for you. Mar and Lapus disagreed with me but Serge agreed.
VAT is a process tax and you are right. For as long as receipts are accurately given, the paper trail, and the recording is a good thing.
In refering to the E-Vat in the article, I simply said that the exemptions were removed and thus the oil prices spiked. It spiked due to the reimposition of a VAT that should not have been exempted in the first place.
The initial VAT law exempted it thinking that since oil is a multiplier, then they might avoid a cascade. Because VAT should be an input-output tax where only the incremental values added are taxed, a cascade should theoretically be avoided.
In the E-Vat deliberations, I was against the additional 2%. Also for the prerequisites which triggered the 2% such as the collection to GDP ratio. The 2% was applied in early February following the year the E-vat was passed. In February, GDP is still comprised of statistical deviations where there are lags in the reporting of agricultural inputs from the field.
I felt that a VAT of 10% was good enough and that fiscal measures were needed in the excise tax area. That is, higher taxes for cigarettes and alcohol.
Fees are charges that agencies can apply without legislation. Parking fees, docket fees (which are terribly prohibitive)even processing fees serve to set up a corruption alternative. When fees are high, then fixers abound. So, you are right. I would rather have a VAT than a fee.
Regards,
Dean
Ahh, thanks for the brief. That makes sense to me, and I appreciate the further elaboration about the E-Vat.
Joe
BTW Joe,
If you eat at a restaurant, you will note that the establsihment slaps a 12% E-Vat on the total bill. What they should be doing is slapping the E-Vat only on the value that they added. For such things as purchasing ketchup, paper napkins, etc., the E-vat on those should already have been netted out (that’s why they call it an input-output tax)and thus their proportionate part in your bill should not be slapped a VAT as those may not be part of values added.
See the value chain from raw tomatoes to pureeing, to preserving, to bottling, to selling the bottle of ketchup. Along that value chain, VAT was applied on values added and thus should not be collcted again.
By imposing the VAT indiscriminately on totals, the restaurant effectively over-taxes or over-collects. The authorities do not bother to educate on the proper way to apply a VAT so there is a lot of over-collecting of VAT.
Dean
@dean
ur complaint here doesnt make sense.
VAT is usually levied on sales at the point of sale. this is what makes it easy to implement.
then a correction takes place: the input VAT is subtracted to make sure what the company remits is the VAT only on that company’s value added.
Dean, I have an E-Vat question. The government is very hard pressed for cash. Would it be better, revenue collection-wise if income tax be scrapped, especially for people earning less than 1K but instead, we raise VAT to compensate?
Dear Cocoy,
They did that to some extent. They reduced income taxes from 35% to 32% and then they increased VAT from 10% to 12%. All in the same E-Vat law.
Good idea on scrapping income taxes for those below a certain income bracket. The scrapping of the income tax for those earning at the minimum wage level (about Php 3,200.00 a month, I think) or the poverty line (about Php 6,195.00 a month or Php 265.00 a day for a family of five)is contained in a draft bill but has not been deliberated on. Those below the poverty line are 30% of the population (its 11% for the USA), so the effect should not be that substantial for government tax collections.
There is a substantial underground economy which are not taxed. These are the cigarette vendors, buko vendors, sales people at flea markets, some maids and drivers, etc, who do not pay taxes even when they are compensated way above the poverty line. My driver and maids are paid above those. Add food, lodging, a prepaid cellphone card allowance and an educational allowance that my wife gives them and they approximate the starting salary of a fresh graduate from the Ateneo.
You will note that the minimum wage level maintains people below the poverty line. The minimum does not include allowances where most of the adjustments are made to compensate. Still, the poverty threshold is a long ways off.
Regards,
Dean
above, you write:
” Not only was the department self-declared impotent against oil price increases, it was evident that what powers the deregulation statutes empowered it to prosecute unreasonable pricing, it could not employ”
what powers does the doe have in this area, supposing it does prove over pricing? in RA8479, there is an antitrust safeguard against “Cartelization” and “Predatory Pricing”, neither of which are over pricing.
there is a section on encouraging retail sales.
i dont think the law has any govt solution, other than encouraging competition. correct? (i’m not sure this is a defect, i’m just saying that these are the powers vested in the DOE)
Dear GabbyD,
There is a provision in the Oil Deregulation law that authorizes the Energy Department to go after those it belives have engaged in “unreasonable pricing”. The powers are motu propio.
However, to do that, the department must first determine the parameters and definition of “unreasonable pricing”. It hasn’t done that. Why?
One answer is contained in Haydn’s response. The energy officials are clueless and incompetent.
Another answer is in a study which the energy department asked a university (The University of Asia-Pacific)to conduct together with a task force from the government. In the study, the group determined that there was no overpricing because the internal rate of return of the oil companies ranged from 8% to 10%.
I haven’t seen the worksheets that comprised the study save for the final report. It’s unsatisfactory but the energy department often refers to it when they invoke the deregulation law to say that they can do little to regulate oil prices.
Regards,
Dean
thanks. i didn’t see that bullet. from the RA:
” Any report from any person of an unreasonable rise in the prices of petroleum products shall be immediately acted upon. For this purpose, the creation of the DOE-DOJ Task Force is hereby mandated to determine within thirty (30) days the merits of the report and initiate the necessary actions warranted under the circumstance: Provided, That nothing herein shall prevent the said task force from investigating and/or filing the necessary complaint with the proper court or agency motu propio.”
the task force exists, but its only recently that they made it easy to contact via “help desks”. the task force works according to this document: http://www.geocities.com/afdb/amendtfrules.htm
but it still is mum about how the task force may come up with a decision on overpricing; that is the methodology and the key statistics or even economic principles.
its all very vague, hence its hard to enforce it, even if they wanted to do so.
i don’t even think the economics profession has a definition for “overpricing”.
Dear GabbyD,
I see your point. That is because of the way many implement VAT.
The Evat is applied at all points in the value chain. Iba-iba lang ang tama ng VAT depende sa stage at VAT rating sa stage na ‘iyon.
What is applied at the consumer end is a residual after certain taxes are collected at every stage. When you look at the law, there are VAT ratings for every stage. What are beyond those ratings are passed down the line and eventually caught at the consumer end. thus, the consumer pays for what have not yet been netted out.
Because little is really netted out and because, for convenience (and mali ang pag-unawa), everyone at every stage seems to be slapping a 12% VAT, so, parang ang bigat sa dulo and that is why it is called a consumer tax.
Regards,
Dean
Wow a real honest discussion about price discovery in the energy industry? How is this possible?
In spite of their serious shortcomings, one of the most important initiatives of the IMF-WB is the Extractive Industries Transparency Initiative.
A large portion of fossil fuels lie under the control of national governments. Their selling prices are done under secret long term contracts and even the amount of supplies that are supplied to the spot markets are highly guarded secrets. Result hedge funds hold sway in the market prices for oil.
The world is not running out of oil. It is running low on cheap oil. Third world governments are becoming major players in the supply of oil.
This is the source of huge opportunities for corruption by states, criminal syndicates and terror groups.
So how can the spot price for oil be used exclusively as a benchmark for fuel products?
The major fossil fuel exporters of the world are not members of this initiative.
So Dean if there is an opaque system for price information how can there be competitive efficient markets?
On another matter Dean boy,
Our labor force participation rate is slightly above 60%. Out of this number approximately out of 30M+ only 2M file income tax returns. The number of income tax payers are slightly less than that.
Is that a massive failure of the fiscal authorities or more a reflection of the structure of the economic system? In major industrial economies unemployment carries with it the distinctive label of non-farm employment figures. If we were to follow that here we would have a 30-40% unemployment rate.
As you are well aware fiscal and monetary policies pivot on the concept of full employment…
If our BSP pivots its monetary policy on the exchange rate then that would be proof that we do not have a fundamental basis for fiscal and monetary policy.
Hence energy prices would also be affected by the BSP’s (ahem) management of the forex rate to manage inflation.
Would it not be better to simply make the peso fully convertible and allow it to be traded internationally instead of the controlled trade stage managed by the BSP at the trading platform of the BAP.
If we do believe in globalization and competitive markets should not we welcome the peso going head to head against all comers. Just like Pacquiao. That would be the best check and balance on governments.
I would like the privilege of trading on the peso while I am abroad… It would open so many possibilities for making money.. It would empower everyone…
Dear J_ag,
If you send me your email addy, I can send you the details of the pricing mechanics of Galoc Oil which I did. Mahaba siya. It’s longer than this essay.
It is accurate and official. There is no corruption in the pricing. At least not in my model which is at least 6 months old. I don’t know now.
Galoc is an offshore platform in Palawan and the oil is being extracted jointly with an Aussie firm. Right now the oil is sold to Petron and is refined by them.
When I was with Ogden Energy, I partnered with one of Galoc’s consortium partners, Alcorn Petroleum. We purchased half of Alcorn’s output from one of their wells (the other half went to Chevron when the price of crude went over US$ 30.00 a barrel sometime back. The engines that Ogden’s plants could only operate feasibly at was US$ 23.00 to US$ 25.00 a barrel then. Not that it was expensive to operate over the US$ 25.00 level, but our loan covenants included a specific range of fuel prices as an automatic default trigger.
When prices rose above the range, interest payments likewise rose.
The partnership was a learning experience so, recently, when Galoc started operations, I looked into their pricing.
Regards,
Dean
Galing mo ‘pre.
I agree that a peso that can readilly be traded anywhere would be ideal. But then one of the characteristics of a currency, acceptability, would be a critical factor. Head-to-head against others would mean that we are trading with almost veryone in the world as does the major economies and their individual currencies. Note that to trade with an economy, one must have a certain amount of their currencies in our reserves. That means that we would have to have some amount of even the most insignificant currency so as to have a meaningful match of the Philippine peso against theirs.
Possible, pero baka mahirap at complicated given that our trade with some countries is limited to exporting our teachers and ya-yas to them in excahnge for inward remittances of US$.
On the concept of employment, since the 70′s, the concept behind the Philipp’s Curve which related monetary policies (specifically inflation rates or money supply controls) to unemployment has changed. Mali na ‘yung dating scattergram ng Philipp’s Curve ngayon.
I guess that lends substance to your observation of our “pivoting” on the FOREX rates affecting oil prices, inflation and then, eventually, impacting on employment is correct.
The BSP seems to be doing the best they can. Its still far from satisfactory though. Sayang nga lang that they have very little in their arsenal left but controling policy rates and some open market operations on FOREX.
Regards,
Dean
Thank you much for your replies. Please note before the emergence of the Euro all European countries traded in Europe with their own currencies.
Countries are also free to sign bilateral currency and trade arrangements.
Now on your comment regarding the present system of inflation targeting as opposed to central banks worrying about full employment.
Our BSP since they gave up the control of policy rate setting to the Federal Reserve, should they not also now give up controls of convertibility and make the peso fully convertible. Market forces will then give us truly an equilibrium based pricing.
Trying to fix the price of the forex rate through interest rates will always force the BSP to give an arbitrage based spread to attract foreign savings. There seems to be always a 4% spread between our policy rates and the FED and the ECB.
That is a plus for the factor services branch of trading and a hindrance for generating employment in the physical economy.
Just look at the BSP establishing that Special Deposit Accounts to clean up the liquidity that it itself generates when it purchases dollars to maintain the forex band. It sets the interest rates for overnight loans and then offers a competitive rate for cleaning up liquidity that it itself generates. The markets then naturally will respond accordingly. Then the BSP governor complains that banks are not lending as they are simply parking funds in the SDA’s. Is the man nuts or crooked?
There is no free market in the exchange rate setting. It is rigged and the traders within the BSP are given an awesome power to intervene secretly and this type of secret dealings would probably lead to some reaping untold fortunes. No one would be the wiser.
In weak states the open and transparent market would be the best check and balance against the probable abuse. We have given the awesome power to some individuals in the BSP to get rich … Even a five centavo change in the forex rate leveraged 20 times is a fortune..
Either we go to controls or open up the market.. My vote is on full convertibility.
That would give everyone the clearer picture on the value of the peso and the government would be hard pressed to lie..
Dear J_ag,
Many local bankers agree with you that the guys at the BSP are control freaks and the example you gave is an indication of that. The other word for them is Keynesian (a kinder word) and I agree that these fellows do not want a free market in FOREX that they do not control.
As for what compels them to want to constantly intervene, your suspicions of their playing the markets is intriguing indeed. Maybe you should write more on that as a separate piece.
As for BSP complaining that the banks are not lending, I agree with you and side with the banks. Forcing them to lend by keeping key policy rates down will not do. Tama ka. Other factors like liquidity controls through open market operations and the overnight rates equally affect their propensity to lend.
Regards,
Dean
Regards,
Dean
Dean,
Bank lending is a business of risk assessment. Alas, in the Philippines, the data for making such assessments are weak. Businesses run “loose” so it is hard to trust their financials. There is no consumer credit agency to compile consumer lending records, so it is hard to assess consumer risk.
When businesses tighten up and there is a (probably government sponsored) consumer credit agency, banks will lend more, because it is a very profitable business. Banks would be foolish to lend broadly into the markets that exist in the Philippines today.
Joe
Good Evening Dean de la paz,
I don’t think this is evat or vat or even oil hehe. Just a question on witholding taxes.
I work for a review center. Recently we had a partnership with a school in that their students review with us and the school receive the tuition fee before turning over to us. We were just a bit confused when we tried to collect from the school they charged a withholding tax of 10% for the total amount.
My basic understanding is that Education is one of the areas where it’s tax free. When we asked the school again they said they could impose the withholding tax because their school is owned by a corporation that belongs to the top 500 whatsit.
Sincerly,
NursePro
Dear Nursepro,
You are right. That is not a VAT. What they are doing is witholding taxes as a “witholding agent” of the government. In other words, they are acting as the government in collecting taxes from your income as a reviewer.
The taxes they witheld should be remitted to the government eventually. Unfortunately, they may earn a float from the time they earmarked from you to the time they remit to the BIR.
You should ask them for a witholding tax form that signifies that they withheld taxes from you. This is the document that you present when reporting your own income and paying taxes on those. The form means that some amount of income taxes had already been collected and that what you are dutibound to pay will be less the amount withheld.
Regards,
Dean
BTW, that’s not even about fuel overpricing.:)
Dear Joe,
There are two private credit rating agencies that the banks use other than their own. One is the Credit Investigation Bureau Inc., the bigger one. The other is a Cebu-based operation. Both are pretty professional. The Bangko Sentral has also established one through legislation and it is under the Banker’s Association of the Philippines and the BSP.
The data bases are good. The risk rating methodolgy follows internationally accepted processes.
The risk aversion towards lending is culturally ingrained where there is a latent pawnshop mentality. Rather than lend on the basis of prospective cashflows, most banks still lend on the basis of security and collateral. On this, there is a preference for collateral that does not readilly disappear. So they prefer real property.
Not everybody owns proiperty in the countyry and not all property are properly recorded.
That is where the difficulty is. Real property is evidenced by titles, tax declarations, and records at the deeds registry, etc. Suffice it to say that records have not been kept neatly, many are missing, some are faked and when we go back to the old Torrens title system, then we traipse on Spanish records, even ancestral domain.
Add here the fact that in the second world war, Manila was razed to the ground together with many records and government documents.
Regards,
Dean
Dean,
Regards to you, too.
Thanks for the info about the credit agencies. I had not known that, and I hope they continue to develop professionally. Although I agree with J_ag that building up savings is important, private debt is also important to convert current income into assets for the future, and can leverage the growing wealth of the Philippines into more spending and jobs. Of course, it has to be a responsible industry.
My borrowing experience was for a car loan. The bank just said, sure, we’ve seen your account transfers for the building of your house, so we know you are good. Here’s your money. There was only a cursory income check, and they cared little about my co-borrower’s prior bad loan experiences, because they were private and hidden, those pawnshop kinds of loans you refer to. I still say it is a difficult market to lend broadly into.
Joe
Just asking hehe. I don’t like to sink in oil for meddling with government oil ticks. It’s just annoying to oil companies avidly campaigning for price increases *because* of increase in the world market but are as sluggish as unprocessed oil in rolling back prices when the world market lowers it’s price per barrel.