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Various Taxes in the Philippines

Posted on December 13, 2017 | No Comments on Various Taxes in the Philippines

There is a saying that nothing is certain in this world but death and taxes. The concept of tax is so absolute and detestable that some critics compared tax with death. Taxation is the power of an entity to impose a financial charge on their members or constituents. The power to tax usually pertains to a sovereign government who has authority and control over its citizens. Tax is important to governments because it is its principal source of income, which it uses to finance its projects, maintain peace and order provide welfare services and other important needs of its citizenry. This power and right is vested upon government by the people themselves, who are also the bearer of correlative duty for such right. Thus, taxation is enforceable and a citizen who fails to comply is punishable by law.

As a sovereign country, the Philippine government has the right to make taxes that it deems necessary to regulate the operations in the country. And the government agency responsible for collecting taxes in the Philippines is the Bureau of Internal Revenue or BIR. However, it is Congress who has the power to create and enact new tax laws. While the Philippines have obviously unique tax laws, most of its tax system is patterned from its former western colonizers particularly the US.

Among the most common taxes in the Philippines are as follows: Capital Gains Tax is a tax imposed on the gains or profits for selling an asset; Documentary Stamp Tax is a tax paid on government documents e.g. SEC registration; Donor’s Tax is a tax on a donation or gift; Estate Tax is a tax levied on inheritance; Income Tax is a tax on income or earnings of a professional; Percentage Tax is tax on sales or lease income; Value Added Tax is a controversial tax imposed the sale of goods; Withholding Tax is the tax taken from the compensation or income of a laborer; Withholding Tax can either be expanded or final or. on Government Money Payments.

An important concept of taxation is the concept of progressive and regressive tax. A tax is said to be progressive if the tax increases as the earnings increase. An income tax is a type of progressive tax because those who earn more, pay more while those who earn less pay less. Although this concept of tax is ideal, the rich people definitely have ways to evade taxes to an extent that they can even pay lower taxes than poor people. Income taxes by professionals for instance can be reduced simply by declaring a small income either by not declaring all income (by not giving receipts to sales of services) or by declaring too much expenses that in turn decrease one’s income.

On the other hand, a tax is regressive if people pay the same tax regardless of one’s income. The VAT or value added tax is said to be regressive because people indirectly pays the same tax to goods or services they purchase regardless of their income or capacity to pay. For instance, a poor man earning P330 a day pays equal VAT for the same milk product that a rich man earning P50,000 a day also purchases in the same store. This makes the EVAT in the Philippines debatable until now because of its anti-poor consequences.

Originally posted 2011-10-26 09:01:50.

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