Why Changing The Philippines' Tax Policy Is Important

I may not be an economist but it's time to think about tax reformation. There's one problem of progressive income taxation is that it may actually discourage progress. What goes wrong? Based on three brothers illustration this is what happens. The problem with the current revenue system of the Philippines is that it actually rewards laziness and punishes diligence. In short, when you earn more then you should pay a higher rate which is in contrast to lower tax rates. 

The taxation system of Singapore and Malaysia is where the highest only reaches to 2% and 11%. If they say that reducing the current tax rate of the Philippines will decrease revenue then think again. You can think of the issue that one valid reason why the Philippines has a huge population of professional tax evaders is because of unjust tax policies.

Think about the reality. Some businessmen are wired to earn more money for whatever reasons. The problem of the Philippines is the desire to establish the fabled Filipino ahem Failipino welfare state program. The progressive tax system actually encourages you to earn less because earning more means you'll have to pay a higher rate. Besides, one question that anybody should ask is that where did all the 32% of the tax money go? That alone will discourage people from paying the right taxes because not only are they punished as individuals for earning more. It also has to do with the fact that it will discourage businesses from expanding.

Speaking of expanding businesses, do you know that many super big businesses today are actually tax evading and paying money under the table? The reason isn't only because of the 32% tax rate. It's also because the 32% tax rate also encourages money under the table for any big time businessmen. While those who can't pay or refuse to the bribes will have to pay taxes but big time tycoons can get away with it. As long as they have connections then the whole system actually encourages a system of impunity. This encourages bullying the lower tax earners who may have been forced to evade because of financial reasons while sheltering big time evaders.

If the maximum ceiling wasn't so high then I don't think any of the big time earners would want to keep evading. Don't you think a maximum of 11% to 12% of progressive tax would be reasonable? I mean, it wouldn't matter anymore if you kept making more money if the maximum tax rate is so low. That would make people have more money for themselves to improve their businesses in contrast to the unjust 32%. This would mean that more people will be encouraged to earn more when they've reached the ceiling because while you'll end up having the highest rate but it's still reasonably high. That would start to discourage tax evasion and start encouraging people to pay their taxes honestly.

Still want to uphold the 1987 Constitution or do you want genuine tax reforms?