A skewed tax system?

No tax - no service
CTALK
By Cito Beltran
(The Philippine Star)
Updated March 10, 2010 12:00 AM

(A)llow me to share a story that was told to former Senator Tito Sotto, which he in turn shared:

Sometime back, a fire struck a bank in the town of Talisay on the island of Negros. People were frantic and did everything to put out the fire. Unfortunately, the fire took its toll and destroyed the bank.

Long after the fire burned out, the local fire truck arrived. It seems that the truck had bogged down because it was old and in need of serious repairs which the town had very little budget for.

A bank official complained about the situation and angrily suggested that the town should do something about buying better equipment.

The town Mayor reportedly heard the angry statements and shot back: “Why don’t you go to Makati and tell them to buy us a new fire truck since your company pays all its taxes to the City of Makati and not the town of Talisay”.

I can’t say how accurate the story goes but the fact is, many businesses all over the Philippines make money in many different provinces but pay their taxes in Metro Manila, particularly in the City of Makati. This is what Senator Tito Sotto has called “The modern-day Imperialism of Metro Manila”.

They make the money elsewhere but haul it all to Metro Manila.

Many of the businesses that pay in Metro Manila also happen to be the “big businesses” that have a lot of investments in Metro Manila, so it is to their interest that the tax money goes where their major developments or investments are, and not in the provinces. Companies such as Ayala, SM, Robinsons, hotel chains, even the franchise giants are all over the country but pay taxes in Metro Manila.

With all due respect to Mayor Jejomar Binay, I can now better appreciate how the City of Makati can afford to give free education, free hospitalization, free movie passes, and other benefits to its two million plus residents. They have all the tax money that should otherwise be paid by corporations to the local governments where they do business.

Makati is not alone in this matter since, cities such as San Juan, Mandaluyong, Pasay and now Taguig have a fair share of corporations that have their office addresses in these cities but make money in Palawan, Boracay, Mindoro, Marinduque, Bicol, Baguio, Ilocos etc.

I learned about this some 20 years ago when I built Club Paradise Resort in Coron, Palawan. After interacting with local officials, I learned that even if they wanted to improve the local airport toilet, the roads and construct a much needed foot bridge for tourists, the town Mayor and the local barangay could not do anything since they had no share in any of the tax revenues generated by the resort we built and operate in their town.

When the resort chef collapsed on the job, we took him to the local hospital, where we ended up bringing a work crew and volunteering to put nylon screens on the entire hospital just to minimize the potential of malaria mosquitoes spreading the disease among patients.

As I compared notes with former Senator Tito Sotto, we came to the conclusion that the law needs to be changed. Only by “giving unto Caesar what is Caesar’s” can we expect real development outside Metro Manila.

Why should students or patients have to go to Metro Manila, or Baguio or Cebu just to get good quality education or medical attention? Why should barangays or local government units have to spend for public services such as police, firemen, barangay tanods, health workers to service business establishments that do not “pay” or directly share the cost of government services?

As far away as Palawan is from Cagayan Valley, the fact is these provinces, towns and cities all have to deal with the after sales nightmare of pollution and health impact. Batteries, plastic coffee cups, PE water bottles, cigarette butts, resort wastes, socially transmitted diseases, peace and order, traffic.

But all the tax money goes into beautifying Ayala Avenue and The Fort. The tax money goes to building sport coliseums and hospitals in San Juan or Mandaluyong. It pays for brand spanking new fire trucks in Manila and Quezon City. And while a little boy dies halfway between Mindoro and Batangas City in the vain hope of getting medical attention, people in Metro Manila are all talking about the free hospitalization because of the ad: “dahil ganito kami sa Makati”.

This is not a condemnation of the City of Makati or “big business”. It is a condemnation of how our tax laws have cheated Filipinos outside Metro Manila.