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Monday, January 7, 2013

Public Education, Unemployment, and Economic Freedom: RH Law and the Tyranny of Online Taxes

Aquino signed the RH Law. The Pro-RH are ecstatic – like lemmings rushing to the ocean. The Anti-RH can only grimace as their wallets are plundered by the increases in taxes – the Sin Tax Law, the taxes on online retailers, and Administrative Order 31.

Pinoys got talent - for PLUNDER!
PINOYS GOT TALENT – FOR PLUNDER AND FREELOADING. CONDOMS, FOOD, EDUCATION, HEALTH CARE – THE ONLY WAY THEY KNOW TO AVAIL OF SUCH IS THROUGH PLUNDER.
According to Lagman an increase on public spending on education by way of RH bill will help reduce poverty. The RH law’s logic is that when the poor have more education – they will have better chances at getting a job – and therefore decrease their poverty.
What’s not being said is that the Philippines is churning out a lot of graduates whose skills are totally out-of-sync with the needs of employers.  Really, how does increasing the number of jobless graduates – by way of public spending at that – reduce poverty? The pro-RH are vastly missing the point.

Does more public spending on education lead to reduction in poverty

Canada which is considered the most educated country in the world has high public spending on education, has lower economic freedom than Singapore and Hongkong – and has a high unemployment rate – even higher than the Philippines.
More public spending on education does not translate to jobs which reduce poverty - economic freedom reduces poverty.
MORE PUBLIC SPENDING ON EDUCATION DOES NOT NECESSARILY TRANSLATE TO JOBS WHICH REDUCE POVERTY – ECONOMIC FREEDOM REDUCES POVERTY.
Hong Kong and Singapore which have lower public spending on education have low unemployment rates and have way higher standards of living than the Philippines.
Thailand has lower public spending on education than Canada, Malaysia and Hong Kong, has more economic freedom than the Philippines – and has lower unemployment than the Philippines.
Japan has lower public spending on education than Thailand, Malaysia, and Hong Kong; Japan has higher economic freedom than Philippines, Thailand, and South Korea; and has lower unemployment than Philippines Canada and Singapore.
What these figures all add up to is that more public spending on education does not by itself reduce poverty because the graduates still need to get jobs. Without jobs, the graduates will still be poor and all that public spending has been laid to waste.
All these show that Lagman, Cayetano and the pro-RH have been engaged in a grand debate that uses flawed assumptions. Canada’s lesson is that educational degrees are useful insofar as students can get a job – without a job, you are just another poor dude, albeit with a degree.

The Education Market

In addition, access to education need not necessarily be state funded because the private sector can provide education at lower cost than the state and deliver content more efficiently. A recent study conducted by the Massachusetts Institute of Technology in 2011 showed that
The Low Cost Private School phenomenon has gained momentum and increased visibility in recent years as researchers have begun to map and record the existence of millions of private schools that cater to the education needs of the economically disadvantaged in developing countries. These schools are profit oriented market enterprises, charging fees in the range of US$ 2 to US$ 15 per month while competing with free-of-cost government schools. Yet, they continue to thrive and grow in numbers.
This thesis explores the factors that have led to the existence of a market driven private sector solution in a segment widely dominated by government provision of services and tries to understand the rationale supporting their existence. The thesis also delves into the question of whether low cost private schools are genuinely serving the purpose they are expected to. And whether these poorly financed, ill equipped profit making enterprises are the rights means to educating millions of children. The thesis also discusses the perspectives, experiences and challenges of different players in the low cost private education ecosystem.
It closes with an understanding of the need for private sector involvement in providing education to the lower income segment and suggestions for the way forward for regulators, policy makers and the industry.
For your reading convenience, the study has been embedded below.

Private sector participation in education of Filipinos is greatly untapped and has been limited to protected Filipino school operators namely the religious groups and the secular schools owned by politicians. The schools owned by trapos are notorious diploma mills which also moonlight as voter mills. The graduates of these schools form a ready pool of voters who will vote for the school owner without batting an eyelash.
Foreign equity in schools is limited and the Philippine government and its cronies have a monopoly on education content. The interesting fact is that these protected schools send their best professors to study in foreign schools then re-echo the content in their schools. Filipino consumers of education deserve better than re-echo seminars because lots of content are lost in translation.
Frankly, why settle for regurgitated content if the foreign content provider can operate in the Philippines without equity limitations and stipulations to go into joint venture with a Filipino national?

Online Tax – Shaping out another landmark scam of the Aquino regime in 2013

The Philippine government’s voracious appetite for public spending needs to be fed. And it has just found another morsel – online retailers.
Commissioner Kim Jacinto-Henares said that online businesses – such as sulit.com.ph, e-bay Philippines, alibaba.com, ayosdito.ph and multiply.com – would have to be registered with the BIR.
“These businesses shall be registered to us, and that they should be paying the corresponding taxes. Otherwise, we will run after them,” Jacinto-Henares said. Even Facebook entrepreneurs who use their personal accounts for business transactions will have to comply with the invoicing requirement.
Consumers are mistaken to believe that these taxes will be paid for by businesses because the cost will be passed on to them. For short, online retailers are simply being made into tax collectors for the Philippine government so that Philippine tongressmen and senatongs can pig out on the pork barrel.
The ink hadn’t dried yet on the sin tax law but the tongressmen and senatongs of the Philippnes already divvied up the loot and granted themselves a bigger pork barrel.
But I digress, the online tax being pursued by the BIR is just part of an ongoing push by brick and mortar crony retailers like Shoemart, Robinsons, Ayala, Gaisano and the like to thwart competition. These retailers currently get incentives and subsidies from government.
As online retailers provide better service and product options than the ones provided by Shoemart and the like – the revenue dwindles and of course, government revenue goes down – as more consumers and online retailers get to keep their money in their wallet instead of putting it in Lagman and Cayetano’s condom funds?

Did the government really lose money because the online retailer didn’t pay the BIR?

On closer scrutiny, someone has to deliver the goods to Juan dela Cruz . That someone will most likely charge a delivery fee from either Juan dela Cruz or the online seller. The delivery service will also have to pay an employee to drive the van to the house of Juan dela Cruz.
That employee will pay income taxes on his earnings at the end of the year – to the BIR. He wouldn’t have earned anything if Juan dela Cruz and others like him weren’t shopping online. In the digital economy, he might even be jobless if there weren’t any online shoppers.
The delivery company will also be paying income taxes, motor vehicle usage taxes and gasoline taxes, which the BIR wouldn’t wouldn’t be collecting if Juan dela Cruz had not been shopping online.
All in all, the Philippine government is most likely making more money off of all of these combined taxes from online retailing’s supply chain than their standard twelve percent per sale collected from crony brick and mortar retailers.
The issue isn’t so much that online sales don’t generate tax – it’s the fact that online retailers have managed to out-flank the brick and mortar retailers.
In lots of areas, online retailers can deliver on the same day with no extra charge and they are expanding their market coverage.
Even after adding the sales tax, it is still a more satisfying shopping experience than to have your car inspected for bombs in Shoemart’s parking lot, to have your body groped (and you are not even in the airport), your bag searched as you enter the store, not to mention the annoying bunch of sales clerks who follow you around with their Homer Simpson-esque “are you buying yet?” – and that’s after a long day at work dealing with your kiss ass moronic bosses who got the position because they are kamag-anak, ka-eskewla, or ka-inuman.
Online sellers also offer more choices and work harder at finding the products that you are looking for at the price you are willing to pay for. Anyone who shops at the brick and mortar retailers will tell you the selection of name brands get narrower every year and you will be literally forced to buy whatever they want you to buy. And if there were name brands, they are priced way too high.
BIR and their beneficiary Senatongs and Tongressman are whinning over non-existent “lost” tax revenue – and government’s crony brick and mortar retailers want to get even with online retailers by way of taxation. All of which us consumers will have to pay for in the name of poverty reduction.
What does the government really mean by poverty reduction and revenue generation? Reducing the poverty of Senatongs, Tongressmen, and tong collectors – or reducing the poverty of citizens. Frankly, I don’t see how my poverty is being reduced when more money is being taken away from me.

About the Author

BongV
 has written 475 stories on this site.

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