Indirect Taxation: Is It Good Or Bad?

1409 words - 6 pages

Imposing Taxation is not bad after all because this is one way how government raises income or revenues to be used for the expenses of the government. Thus; a good taxation process is a foundation of the country’s economic status. Indirect taxation, levied on articles of consumption, has this great advantage,—that the consumer has the power of taxing himself or avoiding taxation as he pleases, and government has the satisfaction of knowing that he generally pleases to tax himself to the full extent of his means. Any man may regulate his expenditure as he thinks proper, and he has only to pay indirect taxes in proportion to his expenditure. This ...view middle of the document...

But this tax is paid by consumer.

The advantage of Value added tax (VAT) is that revenue is secured by being collected throughout the production or distribution process and the production decision do not get distorted due to tax credit provision on inputs, But I partly disagree to the implementation of VAT to certain transaction such us on the petroleum products, importation of coal and, sale by electricity through generation, transmission, distribution of companies, services rendered by professionals such as doctors of medicine, lawyers and other professionals. Even though there are some mitigating factors introduced to offset the impact of VAT coverage. This mitigating factors were not enough to lessen the impact to the end user or us consumers. For example the price increment of petroleum products due to VAT is expected to have significant effect on transportation cost, therefore all price of commodities will possibly increase. However, said price increases will partly negated by reduction of excise tax on diesel kerosene and other bunker oil and LPG since diesel power vehicles are more frequently used in public transport so that the increase in the rate of transportation fare will be lessen. It holds true with the price of transporting cargoes. And the 3% franchise tax on power distribution utilities was also removed to reduce the VAT on electricity and for domestic airline carriers the has been totally abolished. The increased in prices of basic commodities due to VAT on this services is again shouldered by the consumer. Holds true with the services of medical doctors and lawyers and other professionals that was covered by VAT, this practitioners passed the burden to their clientele. On the other hand, the advantage of VAT is that, everyone who buys the product or services pays the same tax which sounds fair and if you buy more, the more you will also pay taxes. And it controls individuals not to become on impulsive buyer and in order for us not to live beyond our means.
But if we look deeper on the issue of Indirect taxation, I agree to the views of commentator Archbishop Cruz of tribune online that imposition of indirect taxes on consumer goods is not only in fact inequitable but also in effect unconscionable. There is generous reason to think that those who thought of this law or revenue bill, proposed and approved its highly questionable legislation, belonged to the elite, the rich and famous. They must have vast resources and fat bank accounts. Hence, while duly preoccupied by direct taxation on their immense assets in cash and kind, its odious complementary part in terms of indirect taxation was however a non-issue to them. They were definitely not those who counted every peso in their pocket and who even did not know to get their next peso.
But the poor and destitute, they too pay indirect taxes on the goods they consume day after day — in the amount just like those in tenure of power and in possession of wealth. Even...

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