There are only two certain things in life--death and taxes, goes the popular saying. If you recently spent hours filling up tax forms, or are among those reminded that you pay personal income taxes of as much as 32 percent, you know that taxes are a fact of life.
Of course, that doesn’t stop you from complaining, and chances are, you’ve probably asked yourself just where your money goes.
The government collects several kinds of taxes, among them, personal income taxes, value-added tax, estate and donor’s tax, other percentage taxes, excise taxes, and documentary stamp taxes. These levies are collected on all types of revenue, except when these are explicitly exempted by the Bureau of Internal Revenue.
It is your personal responsibility to know which tax you should pay, and to compute it correctly. Forgetting to file and pay your taxes, whether willfully or otherwise, is considered a crime.
Similarly, failing to correctly declare the right amount could lead to costly penalties that you would want to avoid. For this reason, you should take your tax responsibilities seriously.
No matter how hard it may be on your pocket, the fact remains that taxes serve a purpose and the greater good. Here are five reasons why you pay taxes and why you should make sure you pay the right amount:
1. They ensure that we receive our basic needs.
Taxes answer for all of government’s expenditures, including the running of those agencies that make it possible for us to access basic necessities and services. This includes water, power, roads, airports, and even the Metro Rail Transit. When tax revenues are low and the government limits its budget for these services, we will ultimately suffer with poor delivery of basic services.
2. They help keep us safe.
Our taxes are used to pay for the salaries of military personnel and policemen, who keep us safe and keep peace and order in our country. Because of tax revenues, both the training and equipment of security forces are upgraded, putting them in a better position to defend us.
3. They keep business costs low.
When the government is able to collect enough taxes, it does not suffer a revenue shortfall which can otherwise affect the country’s economic fundamentals and prospects. When our economic fundamentals are weak because of low tax collections, investor confidence softens, therefore affecting the business environment and raising our country’s risk rating. This, in turn, translates to higher interest rates which can only make it harder for us to do business individually.
4. They help ensure a better future for our children.
Our taxes pay for the salaries of teachers in public schools and fund the construction of school buildings, as well as the procurement of books, and school supplies. Education is a great enabler and equalizer, opening up opportunities that otherwise would not exist for the poorest of the poor. By paying our taxes, we are able to educate our children and the future generation of Filipinos.
5. They help the poorest of the poor.
Taxes fund government assistance for the poorest of the poor. Taxes on alcohol and tobacco, for instance, have been used to fund PhilHealth, the state health insurance fund. Taxes also fund the Conditional Cash Transfer program, which give poor families a monthly allowance as long as they keep their children in school. When government services suffer, the poorest of the poor are hardest hit because they do not have options.
Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.