Right now, majority* of the citizens in the Philippines are unconsciously* taxed via the following:
1. Income Tax, the percentage of which is dependent on your, among others, status; and,
2. Value-Added Tax, wherein an additional 12% is added on the normal purchase price of a commodity.
*Majority because most of the citizens are part of the labor force.
**Unconsciously because more often than not, individuals either do not know about it, or they know but do not care much about it.
There are a few others but allow me to only cite those two as examples.
Taxes are made to raise funds for governmental operations. It is a very powerful power of a State in such as way that the citizens, under normal circumstances, cannot exempt themselves from it. But this inherent power is backed by the idea that the collected amount should bounce back to the citizens. After all, being a citizen of a State does not only equate to being imposed with responsibilities; it is also tantamount to the enjoyment of benefits for being a citizen.
Sad to say, as verbose and innocent the purpose of taxation is, it does not act that way. In reality, we give so much yet receive little in return. Philippines is one of the countries with higher tax rates as compared to the other ASEAN countries out there and yet majority of the people do not feel benefits coming out of it. My observation that it is mainly caused by two things:
1. Corruption of governmental authorities; and
2. Bad and inefficient strategical planning as to the distribution and utilization of funds.
With those two, one can really tell how dysfunctional or ineffective the current government is.
On the plus side, things have improved as compared to the previous years when Estrada and Arroyo were the leaders. Still, even with Aquino in power, I feel that there is still much to do as to the allocation of taxes obtained from the people. I am no financial or economics expert, and there are more factual references out there detailing where the public funds go (Google for governmental reports, they should come in handy). But from my observation, I can give you three things which we definitely need to improve on, budget-wise:
1. Education. I cannot stress enough how important this is. Ever heard of the motto “Give a man a fish and he will be satiated for a day; teach him how to fish and he will be satiated for a lifetime.” This holds true in more ways than one.
Fact is, many young Filipinos today cannot study because they do not have the financial capability to do so; it can be a valid excuse, yes. Compare that to the other countries out there, particularly those in Europe. Some of them have high tax rates (even higher than us), but students can go to school up until college, free-of-charge. Most, if not all, of those graduates are then able to enter into stable and good-paying jobs. Graduates can finance their needs and at the same time, take part in the payment of taxes for the studies of the next generation. They can pave way for the gradual-yet-fast improvement of the system. Plus, most educated people can give good decisions, probably on who deserves to be voted upon during elections. It is a domino effect in such as way that free (and quality) education, as expensive and burdensome as it is, can actually lead to more benefits than allocating the funds somewhere else.
2. Health care, especially for the elderly. This time, public welfare is the core. Elders should be able to enjoy the “golden years” of their lives as a pure act of State’s gratitude of the elders’ contributions when they were in their prime years. If citizens can think of their future peacefully without the worry of what is going to happen if they reached the stage where they are unable to work, then that would give them enough motivation to become productive during their primes.
And it does not stop there. If the citizens can expect help from the government during the dire times (in sickness), trust and confidence is developed. It boosts their morale.
3. Agriculture, including agrarian-reform programs. The Philippines is strategically located at a place where crops and other agricultural products can be bountiful without the need of special effort and measures (unlike those in colder states). We are good at it, and what better way to utilize our resources other than improving what we are already good at? Include that with the application of innovative scientific research for the improvement of process and it could redound to higher GDP in general (which then leads to better economy). Also, food will be cheaper for citizens, and hunger rates will go down.
Corruption is another topic, but that is a harder problem to solve and dwelling on that is not advisable. Instead, focusing on the three above can actually lead to a more efficient allocation of public funds, and it can be an easier and short-term alternative solution to the people’s question of where our taxes go.
Surely we are burdened with high taxes right now. It is definitely fine if majority of the citizens can feel the benefit arising therefrom; unfortunately, that is not the case at the moment. Some folks might even suggest the imposition of higher tax rates, but my apologies: I am not a fan of that concept, thanks to my biased concern for my high-paying salary. Why would I pay for something that I, or the people, will not benefit from?
In fact, one can say that with the amount that the government deducts from us, they are getting more than enough to fund plentiful projects notwithstanding the fact that most of it are pocketed by those in power. Going after those stolen funds is not the only solution: we also need to formulate a more intelligence action plan.
Disclaimer: This is an essay of my personal opinions and as such, not backed up by credible evidences. It is very vague, yes, but in so far as my ideas go, I am merely putting things that I can think of.