Netflix subs and payday sales will buoy PH's economy
Cheer up and pay up, says the government. (Photo: SCP)
There’s been an uneasy sense of worry and dread from the public when it comes to what the next few years will look like. Understandably so, Philippine financials haven't exactly had the best track record in recent memory.
Being neck deep in debt, dealing with a pandemic that is looking like it’ll be going for a 3-peat, and being stuck in the crossfire between a war that is making everything from gas prices to chickens harder to purchase nowadays. Fun times.
If the cost of living was a student in school, it would be the overachiever type that thinks it can do so much better. It has reached the point that everyone else is getting annoyed at it because the people can’t keep up.
Last year, Manila was awarded 3rd place for being one of the most expensive cities to live in Southeast Asia. Imagine having to set aside P50,800 a month for a single person. If you’re lucky enough to not be paying rent, it has to be around P28,800. Not everyone has executive-level salaries.
Remember when paying for groceries didn’t require you to sell off half a kidney? Pepperidge Farm remembers.
Staying positive
At this point, it’s a given that 2022 won’t be a prosperous year for the Philippines. The Development Budget Coordination Committee (DBCC) already confirmed the Marcos Jr. administration’s 6.5-7.5% GDP goal for the year, which is a downgrade from the original 7-8% target of the previous Duterte Administration.
Finance Secretary Benjamin Diokno mentioned last Friday that the higher consumer prices get, the more aggressive Bangko Sentral ng Pilipinas (BSP) will be with its interest rate hikes.
However, the Marcos Jr. administration is claiming that things will get better in the next six years. Somehow.
Diokno points toward the 8.5% growth of the Philippine economy during the first quarter as a good sign of hope. This was supported by Budget Secretary and DBCC Chair Amenah Pangandaman when she said “The increase in household consumption and private investments, along with a robust manufacturing industry, high vaccination rate, improved health-care capacity, and the upward trend on tourism and employment have allowed us to safely reopen the economy and register a positive growth for the first three months of 2022.”
Despite the massive uptick in cases brought by the Omicron variant in the first few months of the year, the economic movement in the country was able to push on. Now halfway through the year, it seems like the public barely cares about the pandemic anymore. Malls are packed, offices are filled with employees, and vacations are being set.
The DBCC set an ambitious 6.5-8% yearly growth target for 2023-2028—and ambitious it really is. In the proposed six-year fiscal framework that is yet to be approved, it has goals that are in the likes of reducing the poverty rate to 9% by 2028 and bringing the Philippines to upper-middle income status before President Marcos Jr. ends his term. Fingers crossed indeed.
The cost of staying positive
Part of the Philippine government’s optimism comes in the form of pushing for more taxes.
It was projected that collecting yearly value-added tax (VAT) from online transactions and single-use plastics could generate P13.2 billion and P1 billion respectively. Don’t worry, Diokno reassured that the government isn’t planning on introducing new or higher taxes. For now at least.
Diokno explains the plan to charge taxes on online transactions by comparing it to purchasing from regular stores. It would only be fair to apply the same 12% VAT to both.
Any type of online providers of products and services which includes video and audio streamers (content creators), shopping sites, and advertisers on social media will be charging extra soon. Yes, even your Netflix and Spotify accounts will get more expensive.
The bill came from Albay Rep. Joey Salceda who says that the digital economy is rapidly growing so it’s basically free real estate for taxes. If his proposal is followed, it could bring in an extra P72.5 billion in over five years.
“Our tax system really needs to catch up to the digital economy, which grows and changes by the day,” Salceda claims.
Not everyone is happy about all of it. Understandable since it’s the consumers and the everyday folk that will feel the extra punch with the added taxes.
Former Bayan Muna Rep. Carlos Isagani Zarate was quick to criticize the plans as he says that “the proposed tax is another measure that hits the poor and middle class more than the rich and big corporations.” The human rights lawyer instead offered a different solution which involves taxing the rich and big corporations rather than those who can barely pay the bills.
Zarate continues to expose the anti-consumer implications of the proposal by contrasting it with the government’s decision to approve the CREATE act (Republic Act 11534) which lowered the income tax rate of big corporations and the rich folks in the Philippines.
It only makes sense that the ones who are capable of paying up should be charged more but with everything that’s going on in the world right now, it’s rare to stumble onto something that does make sense.
What does this mean for taxpayers in the future? We're looking at more expensive online purchases and even more reasons to freeload off of someone’s Netflix account.
