Inflation is now running at 6.4 percent. What can you do to overcome this?
The answer depends on your station in life. If you are one of those with P250,000 in annual income, you have nothing much to worry. You save about 3,000 per month in income taxes from the new income tax rates and exemptions under the new train law. The higher is your income, the higher is your savings. But not if you are in the bottom 30 to 40 percent of our people. You have no such savings from the new income tax system. You were already exempted in paying income taxes before because of your low income. Now, with inflation caused by the train, you can only tightened your belt. If you still have a belt and your stomach is still intact.
The 2015 Family Income and Expenditures Survey is telling us that when you are in Central Visayas and your annual average family is P230,000, you already belong to the 7th decile, or the 8th decile if it is P278,000, of the total number of families when arranged from the poorest to the richest family. If your family income is the average of the two, about P250,000, your family is between the seventh and eighth richest in the country. You are lucky to be part of the upper third of our people. But not if you belong to the fourth decile or lower whose average family income is P150,000 or less annually.
If your family is one of those who earn only P150,000 annually, the 6.4 percent inflation rate means that your family will have lost P9,600 in buying power now. Your P150,000 last year is only worth P140,400 today. How can your family cover this loss? By working more? So many are still unemployed or underemployed. Go into business? Where would you get the capital? Do you know how to run a business? What business? Not everyone are good in business.
Meanwhile, if you earn about P250,000 annually, like our ordinary public school teachers, your P3,000 monthly savings from income tax under the new train law amounts to P36,000 a year. But how much did you also lost from the current 6.4 inflation rate? With this inflation rate you now lost P16,000 in your buying power. Your P250,000 last year is now worth only P234,000. However, with your 36,000 pesos in savings from taxes under the new train law, you are still ahead by 20,000. Now I could just imagine how much savings Secretaries Diokno, Pernia, and Dominguez have with their salaries and bonuses that can only be counted in millions of pesos a year. Is this why they say there is lot of many going around and why prices are rising. My foot!
Yet, is P250,000 in annual income even enough for a family these days especially our teachers who are buried in debt from the GSIS and private lending institutions that leave almost nothing to their monthly salary after the automatic deductions? And look how much the government promised to give to our poor families. Only P200 a month. This is not even enough for one-way fare daily in Manila when one goes to work by jeepney or LRT.
My point is that when we impose a new tax system, we must not only look into how much more to collect but also consider who actually are impacted negatively by it, such as the new train law that raises our consumption taxes but which hurt so much the poor who are not benefited from the reduction in income taxes. It’s stupid. Heartless.
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