2nd On-Line Presidential Forum
"The Income Tax Suppresses Economic Growth"
2010 Presidential aspirant "Dr. BRP" answers questions about the individual Income Tax which has been imposed by Congress upon Filipino household earners since the American period. BRP is the acronym of Bishop of the Right and the Poor. In this 2nd On-Line Presidential Forum, Dr. BRP, Chairman of the University of the Philippines System Christian Alumni International Open Economic Institute, asserts the need for the abolition of the individual Income Tax.
QUESTION : What will be your first act as the President of the Philippines ?
ANSWER : I will issue a presidential directive to the BIR to stop collecting the Income Tax. Then, I will ask Congress to amend the National Tax Code of 1997 because the people have spoken, and this is what the people want.
QUESTION : Why is it necessary to abolish the Income Tax?
Dr. BRP : My answer is simple - it suppresses economic growth.
QUESTION : In what way does the collection of the Income Tax suppress economic growth?
ANSWER : The imposition by Congress of the Income Tax upon Filipino income earners has lowered the Filipino household income for almost a century now since the Income Tax collection began in 1913. It is a colony tax which has continued up to this day. A low household income results to low spending and low savings. Low spending discourages and pulls down higher productivity. The result is poor economic growth.
QUESTION : How does a nation achieve high economic growth?
ANSWER : Through the MERCADO FORMULA(Market Formula), which is WEGG+HIS+BP=SEG or Wise,Exemplary,Godly and Good Government + Higher Income,Spending,and Savings + Better Productivity = Strong and Sustainable Economic Growth. There's no better way. You can't achieve high economic growth by suppressing the market forces. No way! The government has to increase family or household income. A higher household income will result to higher spending, and higher savings. Savings will eventually become expense, because we save so we can later on buy the things which we want. Higher spending will encourage higher productivity of goods and services . This is the way to attain higher economic growth.
QUESTION : It is easy to understand that removing the Income Tax will result to higher family income, and higher business growth. But how will its abolition result to higher government tax collections. I'm confused. Please explain.
ANSWER : I will explain this in a very simple manner by using a simple example. Consumers' confidence in the economy will naturally go up once their monthly income is increased. As a result, they have more money to buy goods and pay for services. Let's say that out of the 25 million Filipino households, one million household presently buy and consume one small bottle of Nescafe per month. One million bottles times 12 months equals 12 million bottles of Nescafe a year. For instance, the government gets a tax of one peso (P1) per bottle . That means an accumulated tax of twelve million (P12,000,000) pesos a year.Then, the government gives up the Income Tax as a form of investment to its people. Family incomes go up. Now, more families can afford to buy a bottle of Nescafe, and they also want to taste Nescafe. Let's say that out of the 25 million Filipino households, 10 million households buy and consume one small bottle of Nescafe per month. Ten million bottles per month times 12 months equals one hundred and twenty million (120,000,000) bottles of Nescafe. Since in this example, the government gets a one peso tax per small bottle of Nescafe, then it gets one hundred and twenty million (P120,000,000) pesos per year from this item alone. That means an addition of one hundred and eight(P108,000,000) accumulated tax. Do you get it?
QUESTION : Do you favor increasing E-VAT after abolishing the Income Tax?
ANSWER : My answer is a strong "No!" There's no need for that. I do not agree with those who are saying that we have to increase the E-VAT and the excise tax to increase government revenues so it can finance public construction and social services. I don't agree with this "tax and spend" formula. This has been the formula in the Philippines for centuries, and look at what we have become.
QUESTION : So, you are saying that it is possible to achieve higher government tax collections by eliminating the Income Tax?
ANSWER : Yes! That's what I'm saying.
QUESTION : Why didn't Filipino presidents urge Congress for the abolition of the Income Tax?
ANSWER : Well, it is sure revenue for the government. That's why. And every Filipino president since Manuel Quezon has inherited the Income Tax. And our presidents saw it as a necessary tax because it increases government revenues. It does. But at the expense of the Filipino families' income and business growth. In this present formula, the government is the winner and the Filipino families and businesses are the losers. The MERCADO FORMULA wants these three sectors - Filipino households, business sector, and government - as all winners. Isn't that a better idea?
QUESTION : Are there other ways of increasing family income without abolishing the Income Tax?
QUESTION : One other way is through entrepreneurship. And I fully support this. Let's encourage entrepreneurship. But entrepreneurship has limitations. Can you make 10 million income taxpayers as successful entrepreneurs? Remember, they are the teachers,policemen,soldiers,government employees, private employees, nurses, doctors, writers, announcers, broadcast journalists, artists, etcetera? Where will you get the capital for them?
The abolition of the Income Tax will result to more entrepreneurs because the taxpayers will have higher income.
QUESTION : It looks like you are determined to push through with this fight.
ANSWER : I am. I am fighting for the future of our country.
