The impact of the Tax Reform for Acceleration and Inclusion or TRAIN Law is beginning to dawn on the working class and consumers. Workers from both the public and private sectors are now receiving more money for their wages as the non-taxable individual income has been raised to P 250,000.
But while the take home pay of Filipinos got a big boost under TRAIN, Filipino consumers, however, will have to pay more taxes for fuel, sugar sweetened beverages, automobiles, tobacco products and even cosmetic procedures, among others.
Signed into law by President Rodrigo Duterte on December 19, 2017, TRAIN is projected to raise the much needed funds for the Duterte administration’s “Build, Build, Build” program. The President’s flagship program under his 10-point Socio-economic agenda or the “Dutertenomics”, the Build, Build, Build program is designed to reduce the country’s poverty from 21.6% in 2015 to 13%-15% by 2022.
The early indications of the President’s “Dutertenomics” show signs of good years ahead. Thanks to Duterte’s commitment and determination to rid the government of corruption and smuggling.
More funds lost to illicit trade
And talking of poverty alleviation in the country, the President can even do more for the Filipinos if the hundreds of billions in lost government revenues due to illicit trade are collected.
In a Multi-Industry Illicit Trade Research conducted by the Center for Research and Communication of the University of Asia and the Pacific, as commissioned by the Federation of Philippine Industries (FPI) through its Fight Illicit Trade (Fight IT) campaign which I chair, the study showed that the total value of goods smuggled into the country or traded illegally in the following industry sectors — petroleum, steel, resins, wood, cigarettes, sugar, palm oil and automotive batteries — from 2011 to 2015 reached P904 billion. The amount includes the multiplier effect of such illegal trade practices like the reduction in the production volume of local manufacturers because of unfair competition from cheaper but, in many instances, not standard compliant smuggled goods, and disenfranchisement in the labor force.
Topping the list of the most illegally traded goods are petroleum products at P608 billion, followed by steel at P106.1 billion, wood at P42.6 billion, cigarettes at P30.9 billion, resins at P34.4 billion, palm oil at P9.8 billion, sugar at P9.3 billion, and automotive battery at P0.75 billion.
And the study covered only eight industry sectors. Had it covered more industries, the value of goods smuggled or illegally traded in the country might have even reached trillions of pesos from 2011 to 2015. How much taxes could have been generated to raise more funds for Duetrete’s Build, Build, Build program had the revenue potential of these illegal transactions been harnessed?
Enhance revenue collection efforts
Having been in the anti-smuggling and anti-illicit trade campaign for years, these being the principal advocacies of FPI, we have already identified the “modus operandi” of smugglers and illicit traders to cheat the government of its much needed taxes. From outright smuggling to technical smuggling through undervaluation, misdeclaration, misclassification, including the non-compliance to mandatory standard requirements, we have the antidote to all these problems.
And as the directly affected sector of the country’s problem on smuggling and illicit trade, the Federation of Philippine Industries will continue to aggressively pursue its campaign against such illegal practices, if only to protect the interest of local manufacturers, protect consumers from the risks of buying sub-standard and/or uncertified goods, and most of all, to help raise more revenues for the government.
Harnessing the revenue potential of these illegal transactions, I believe, is a good source of additional funds for Duterte’s Build, Build, Build program, and a win- win solution to the government’s perennial problem on smuggling and illicit trade for several reasons.
First, this will deter smugglers from continuing their illegal activities, if every time they smuggle goods into the country, their shipment will be alerted and/or seized. Second, consumers will be protected from the risks of buying sub-standard and/or uncertified goods. And most importantly, the government would be able to generate more revenues for its projects without putting additional tax burden on the Filipinos.
This solution, indeed, would be a boon to the government, Filipino consumers and local industry, but a bane to smugglers and illicit traders.
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For my next column, I will discuss the issues on squatting and how it threatens the rights of legitimate landowners, and its environmental impact on the community, among many others.