Fourth On-Line Presidential Forum
"Less taxes is the MERCADO FORMULA's key to increasing family income,business growth, and government revenues."
*BRP wants to abolish the income tax to increase family income, business sales, and government revenues.
* He also wants to abolish the Real Estate Tax on inherited properties to improve the lives of farmers,laborers, fishermen and small businessmen.
*Government taxes on power and oil will also be reduced to improve manufacturers' productivity, reduce prices of goods and services for households, and increase the income of bus, jeepney,taxi,and tricycle drivers.
In the Fourth On-Line Presidential Forum, 2010 Presidential Candidate BRP (Bishop of the Right and the Poor), Chairman and Dean of the UPSCAAI Open Economic Institute, and President of the Foundation of Strategic Economics, states that the old economic model of increasing taxes to support government spending is a flawed and weak economic model . He expounds on why, besides the abolition of the Income Tax, he wants the tax on inherited lands removed. He also stressed the necessity of decreasing the taxes imposed by the government on power, oil and petroleum products to ease the Filipino people's economic hardships.
For a national and international discussion of these issues, we request you to send the Fourth On-Line Presidential Forum to your e-mail list. Thank you and God bless you and your dear ones.
QUESTION : You have made it clear during the past three On-Line Presidential Fora that you want to remove the Income Tax. Is the Income Tax your only target?
Bishop of the Right and the Poor (BRP) : No.
QUESTION : You mean you want to target other taxes as well?
BRP : Yes. I want to remove and reduce other taxes.
QUESTION : What are these other taxes which you want to remove or reduce?
BRP : I want to remove the tax on inherited lands. I also want to reduce the taxes imposed by the government on power, particularly electricity, as well as the taxes on oil and petroleum products.
QUESTION : Kindly explain first why you want to remove the real estate tax on inherited lands. Why?
BRP : Well, it's simple. Many second-generation, or after World War 11, farmers,laborers,fishermen, and small businessmen have inherited agricultural lands and residential lands from their parents. The government has imposed real estate taxes on these pieces of land. Because of these imposed taxes, many inheritors have not been able to obtain Transfer Certificates of Titles indicating ownership of these properties. Since they don't own the lands yet, for they are still in the names of their deceased parents or owners, the inheritors of these real estate properties can not use these lands as collaterals in obtaining loans from the banks . They need capital to improve the productivity of the lands, but capital formation from the real estate properties through loans is next to impossible because they are not the registered owners yet. Suppose you are a farmer with three children, and you inherited three hectares of agricultural land from your parents who are both deceased. You were taught by a Land Bank agricultural officer that it is possible to plant three crops a year, and even plant coconut and other fruit trees in-between your farm. You want to improve your farm's productivity and increase your family's income. But you need CAPITAL. You need P300,000 for this project. Where will you get P300,000 if you are a farmer? Your Land Bank friend tells you that you can borrow from the bank by using your farm as collateral. Much as you want, you can't use that farmland as bank collateral unless you have the Transfer Certificate of Title(TCT) as the owner of the property. And you have not applied for the Transfer Certificate of Title because you don't have the money to pay the imposed government taxes on your inherited property. So, as a farmer, you are reduced to a pitiable harvest of your three-hectare farm. And that's why you are poor, and will continue to be poor. You can't send your children to college, and they will most likely be poor like you,too. This scenario is nationwide, and it is very frustrating because it dampens the productivity of farmers, laborers,fishermen and small businessmen who have inherited real estate from their parents.
QUESTION : Are you implying that it is government which is pulling down land productivity because of the Real Estate Taxes it has imposed on these properties?
BRP : I'm not just implying it. I'm saying it. It is the government which is at fault in improving land productivity because of its greed. To maximize land productivity, we must remove the tax on inherited farmlands and residential lands.
QUESTION : Why include residential lands?
BRP : Okay! Let's say that you are a laborer. You inherited just a house and lot from your deceased parents. You have five children, and you are the only breadwinner in your family. Your wife takes care of your growing children who will soon go to college? You have a regular salary from your company which has employed you as one of its "machine operators" for the past 10 years. Since your children are in the elementary school and in high school, you have begun to experience the severe economic grind. Your wife tells you that she wants to start a carinderia below your two-storey house, but she needs P200,000 capital for fixing and painting, and the daily carinderia purchases. Where do you get capital? You have already borrowed from SSS for past needs, and you are paying both loan premium and interest. You seek the help of your brother, but he doesn't have money,too. You owe money from the "5-6 lender". You have nobody to turn to for help. Then, your wife suggests that you loan from the bank, using your house and lot as collateral. She promises that in two years time, she will do her best to manage the carinderia well so you can pay the loan. Much as you want to use the house and lot as bank collateral, you can't because ownership has not been transferred to you. The house and lot are still in your parents' name. Why? Because you have no money to pay for the compounded Real Estate taxes imposed by the government on your piece of residential land .You can find this situation all over the Philippines. So, this government-imposed taxes on inherited properties is another cause of the sufferings of millions of farmers, laborers,fishermen,and small businessmen all over the country. That's why I want to remove this tax. To me, this tax is oppressive because it has made millions of Filipino families poor when they could have used their inherited lands to make their families rich.
QUESTION : But if you remove the Real Estate Tax, what will the government have?
BRP : More revenues, of course! And this is what I have been trying to explain in the past three On-Line Presidential Fora. Let's look at our examples of the family of the farmer and the family of the laborer. As the President, I order the BIR to suspend the collection of the Real Estate Tax. Then, I ask Congress to abolish the tax because this is what the people want. That the people elected me as the Philippine President is a proof of that. The tax is abolished. Now, it has become very easy under my administration to transfer certificates of ownership to inheritors of these pieces of lands. The family of the farmer has become richer because they are able to use the land as their bank collateral. The farmer has been planting three crops a year, and has even planted coconut trees and fruit trees in between his three-hectare farm. They have paid back their loan because of the successive bumper crops from rice, peanuts,and watermelon. The family of the laborer or "machine operator" has become richer because his wife has managed the carinderia well. In fact, after two years, they have fully paid their loan,too. Since their family income has increased, they are able to buy more goods and pay for more services. They can buy Nescafe, pairs of shoes, clothes, socks, dresses,shirts,rice,fish,vegetables, fruits, canned goods including corned beef, Coke, Pepsi, brand new radio and TV set, various appliances, and many other manufactured goods. They even go to MacDonalds,KFC,Jollibee, and Starbucks! And you know that the government collects the excise tax and the E-VAT from the manufactured items. So, the government has gained more taxes from the goods they buy. And there are millions of families like them who may also do their feat if they have the capital. And this capital can be obtained if they can use their inherited properties as bank collaterals. Do you understand what I am saying? Less taxes is the MERCADO FORMULA's key to increasing family income, business growth, and government revenues.
QUESTION : Okay! I get your point. But why do you also want to reduce the taxes on power and oil? Let's take power first. Why do you wish, as the President of the Philippines, to reduce the tax on power?
BRP : Power in the Phillpines is one of the most expensive in Asia. Do you know what this means? It means that Philippine manufacturers' capability and capacity to produce is dampened by the very expensive power rates. It means that we have a low manufacturers' productivity compared to many Asian countries because manufacturers try to limit the use of power, which includes electricity, in the production of goods and services. Let's remember the MERCADO FORMULA which is - WEG+HIS+BP=SEG. BP in the formula stands for "Better Productivity", that is HIGH in quantity and quality. The letters HIS represent "High Income Spendings and Savings", WEG represent "Wise,Exemplary,Godly and Good Government". These combination results to SEG, which means Strong and Sustainable Economic Growth. If the cost of power is high, causing low manufacturers' productivity, then it will contribute to Low or Poor Economic Growth. High power costs will not only affect productivity, but the prices of manufactured goods as well. This will cause lower or poorer sales. So how can manufacturers grow? Or how can they survive? If they fold up due to high operating costs, many people will lose their jobs. On the other hand, if I reduce the tax of power, then this will result to higher manufacturers' capability and capacity to produce manufactured goods. They can lower the prices of their products because I lowered the tax. More people will buy their products, and they will have better sales. They can hire more people as they increase productivity. As their sales and income grow, they will hire more people, thereby increasing employment. They can afford to increase the salaries of their workers. And because more of their manufactured goods are sold both in the local and international markets, and the government has a tax on each manufactured item sold, then the government will have higher tax collections because of the increased volume of items sold. This is the MERCADO FORMULA!
QUESTION : And the reason for decreasing the tax of gasoline and oil products?
BRP : Decreasing the government tax imposed on gasoline will also result to an increase in tax collections. It will benefit the government as much as it benefits the consumers and the transport operators in particular, and the total business scenario.
QUESTION : How come? How will this happen when you decrease the tax?
BRP : Well, when government decreases the tax it imposes on gasoline and petroleum products, bus drivers, jeepney drivers,taxi drivers,tricycle drivers and transport operators will have higher earnings. But not only that - they will also buy more gasoline and petroleum products. With more earnings, they can buy more buses,jeeps,tricycles,and cars which will be consuming more gasoline and petroleum products. An increase in the volume of sales of these products will mean higher tax collections for the government because more liters of gasoline consumed will mean more taxes collected.
QUESTION : Where did you get this economic concept? What kind of economics is this?
BRP : I operationally define this as "volume economics". It is revolutionary. The Lord God has revealed this to me, in the same way that He has revealed it to Christians like former US President Ronald Reagan and former British Prime Minister Margaret Thatcher. In the US, they call this "Reaganomics". In Great Britain, they call it "Thatcherism". In the Philippines, we call this the MERCADO FORMULA, or market formula. Both President Reagan and Prime Minister Margaret Thatcher have led their respective countries in the biggest and most successful economic leaps in their nation's history by using the ideas God gave them. They are both believers in Christ. It is high time that we also use this form of economics in the Philippines, as the Lord God has revealed it to us. God is the Highest and Ultimate Source of wisdom. He is far wiser than all economists combined. Let start the MERCADO FORMULA with the abolition of the Income Tax.
