Author Topic: Tax Exemption for Middle-class  (Read 862 times)

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Tax Exemption for Middle-class
« on: January 04, 2018, 03:14:34 PM »
EXEMPTION OF P250K FROM INCOME TAX IS THE BEST SHIELD OF THE MIDDLE CLASS VS. TRAIN TAX HIKES

Exempting the first P250,000 of the income of individual taxpayers is the most effective shock absorber of Filipino families, especially those in the middle class, against the price increases resulting from tax hikes in the TRAIN tax reform law.

Note also that already factoring the impact of TRAIN, the inflation forecast of the DBCC for 2018 to 2020 is 3 percent plus or minus 1 percentage point. The DBCC is the government’s Development Budget Coordinating Committee. For 2018, the Bangko Sentral forecast is 3.4 percent. 

There are fear mongers out there who continue to paint the TRAIN Law as bad for Filipinos, when it is not. TRAIN is one of the most historic tax laws of the country. It corrects the gross injustice the old income tax system has been inflicting upon the middle class and the poor since the 1990s.

The second TRAIN is coming soon according to Finance Secretary Sonny Dominguez. I, for one, look forward to seeing the details of the second tax reform package. I look forward to working with President Duterte’s economic advisers on arriving at the right mix for the people and the economy.

When individual income tax payers start receiving their salaries in January, the fear mongers’ protestations of gloom and doom will fall on deaf ears. When the poor get their tax reform cash transfer subsidies, the fear mongers will encounter deafer ears. When college students enroll in SUCs, deafer ears. Soon enough, the fear mongers will only have each other to talk with.
 
I now take this opportunity to offer some advice to salary earners, the self-employed, and small-scale entrepreneurs on how their personal disposable income can be put to good use.

Remember all those times before when you or your loved ones got sick or you needed cash for tuition and you wished you had some extra cash stashed away? Now would be the time to open an extra savings account to which you will transfer some or all of the extra cash because of TRAIN. 

Another way to save for those emergencies is to purchase a pre-need medical plan for ER, diagnostic exams, and hospitalization.

Savings can also be used for buying assets that will earn additional net income for the family, but before embarking on that please compute all the costs, risks, and conservatively estimate for possible future income.

The very last thing you should spend that extra cash on is impulse buying, purchasing a “want” item instead of a “need”, or any other expense that does not come with a future benefit. (END)

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Re: Tax Exemption for Middle-class
« Reply #1 on: January 04, 2018, 08:43:11 PM »

Who Are The Middle Class In The Philippines?

August 2, 2017
 
 by Marc Adrian

In the Philippines, according to the most recent research done by National Statistical Coordination Board, only 3 out of 20 households belong to the middle class population, with two thirds of them residing in urban areas. The middle class plays within the gap between the poor and the rich, and basing on these numbers, that line seems to be a lot thinner than what many of us perceived.

The middle class is basically defined as the socioeconomic group between the affluent and the poor. In a more financially focused definition, the middle class is made up of those people who have the ability to choose their lifestyle, because they have just enough resources to do so without compromising their basic needs. In economics, this socioeconomic class is a crucial benchmark of a country’s economic standing, thus it is every developing country’s ultimate goal to grow this segment of their population.

Defining who is rich and who isn’t can be straightforward to the laymen. However, defining who lingers in between these two contrasting classifications isn’t as easy.

So, which category do you really belong to?

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Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

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Re: Tax Exemption for Middle-class
« Reply #2 on: January 04, 2018, 08:53:45 PM »

How much do you earn and spend?

Primarily, the overall household income is a determinant of an individual’s socioeconomic standing, especially in the Philippines where this classification is mostly associated with finances. According to the National Statistical Coordination Board’s (NSCB) now known as the Philippine Statistics Authority (PSA), the income classes for an average household of three are as follow:

High income:   
Monthly : ₱ 50,000 and up
Annually: ₱594,317 and up

Middle income:   
Monthly : ₱11,915 to ₱49,526
Annually: ₱142,975 to ₱594,317

Low income (Poor):   
Monthly : ₱0 to ₱11,914.5
Annually: ₱142,974

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Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

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Re: Tax Exemption for Middle-class
« Reply #3 on: January 04, 2018, 09:02:52 PM »

Another indicator that would factor in as a determinant of the socio economic classification is the family expenditure – the ratio of the overall household expenses to the monthly income. The NSCB simply grouped the country into three segments: the high income, middle income, and low income groups, each representing the respective socio economic classes.

Food   
High income  : 21.1%
Middle income: 34.8%
Low income   : 53.4%

Rent/rental value of occupied dwelling units   
High income  : 16.6%
Middle income: 13.9%
Low income   : 10.7%

Transportation and communication   
High income  : 12.5%
Middle income:  9.8%
Low income   :  5.3%

Fuel, light and water   
High income  :  5.6%
Middle income:  7.7%
Low income   :  7.7%

Taxes   
High income  :  5.4%
Middle income:  2.4%
Low income   :  0.5%

Education   
High income  :  3.7%
Middle income:  5.9%
Low income   :  2.1%

Personal care and effects   
High income  :  3.0%
Middle income:  3.6%
Low income   :  3.9%

Others   
High income  : 32.1%
Middle income: 21.9%
Low income   : 16.4%

Total   
High income  : 100.0%
Middle income: 100.0%
Low income   : 100.0%


According to the breakdown of family expenditures from the NSCB, on the average, the middle class spends 34% of their income on food, 13.9% on home/rent, 9.8% on transportation, 7.7% on utilities, 5.9% on education, and 21.9% on others which can include savings, recreation expenses, and the likes.

Do note that these data can only be used as a baseline for the classification as it only represents a family of three. Assets and properties are also not taken into account in this study gathered by NSCB. The expenditure figures however may vary from one region to another, as the cost of living in the Philippines differs greatly per region. The cost of living in Davao may not be as high as the cost of living in Manila or Cebu.

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Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

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Re: Tax Exemption for Middle-class
« Reply #4 on: January 04, 2018, 09:07:26 PM »

So, are you in the middle class?

Based on the data from the NSCB, for a household of three to be considered as part of the middle class, they must meet the following criteria:

#A household income of  approximately ₱11,915 to ₱49,526  per month or ₱142,975 to ₱594,317 annually. The bigger your family is, the higher your income should be in order to fit into this classification.

#If you’re single, and your income immediately falls in this range, it’s safe to say that you belong in the middle class, as long as you can freely choose your lifestyle without compromising your daily essentials such as food, transportation, shelter, and etc.

#Overall household and moving expenses on the average is 66.2% of your monthly income, the lesser the better.

#Approximately 21.9% of your income can be considered as your discretionary fund which you can spend on luxury items, vacation, non-essential goods and services, or investment and savings. In other words, it’s extra money you can pocket after paying your bills and spend on all your necessities.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=88870.0
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

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Re: Tax Exemption for Middle-class
« Reply #5 on: January 04, 2018, 09:12:37 PM »

Pitfalls of the middle class

It cannot be denied that the biggest threat to the middle class is economic stability. While everyone in the population gets affected eventually with its rise and fall, the middle class on the other hand are the first in line to experience its strain.

Job creation

Primarily, the middle class is dependent on salary as their main source of income. This means that the bulk of the middle class population are working class; this is true not just to the Philippines, but even on a global scope.

When a country lacks good paying jobs, it will create instability to its middle class population.This explains why America experienced a decline in its middle class population during the recession in early 2000s. On the contrary, the Philippines saw a rise  when the Business Process Outsourcing (BPO) sector in the country was born. 

Inflation

While inflation affects each and everyone in the population, to the middle class, it has a much bigger implication. For them, it can spell the difference poverty and financial stability.

When cost of living or taxes increases they feel the brunt of it. If inflation isn’t countered by the government with mitigating measures or at least couple it with efficient financial aid, the middle class will be financially squeezed. In turn, it will push back most of the population from the lower end of the socioeconomic spectrum beyond the poverty line.

Inflation without any economic intervention is basically how you pull down the middle class sector of a country.

Social safety nets

Efforts of the government to provide financial aid to the people are channeled through agencies such as Philhealth, Pag-IBIG, and SSS. The benefits that these agencies provide offer major financial assistance to  the middle class mainly because it’s mostly this sector that’s actively funding these programs.

For one, Pag-IBIG is the most accessible means of the poor and middle class to purchase a home. Compared to banks, Pag-IBIG is highly inclusive of all socioeconomic classes, even to the poor.

If financial assistance from the government become inefficient, it’s the spending capability of the middle class that will mostly be hampered.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=88870.0
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

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Re: Tax Exemption for Middle-class
« Reply #6 on: January 04, 2018, 09:14:04 PM »

The middle class and the economy

Setting the middle class apart from the extreme ends of the social spectrum can sometimes cause misconception. That’s why often times, (upper) middle class are easily associated with the rich while lower middle class individuals mistake themselves as poor. However, as definite as how we see what “rich” should look like, middle class can be unclear simply because it’s greatly dependent on the economy.

While the poor population also have a more constricted spending capability, the middle class’ income and spending power can easily get pushed back beyond the poverty line (for those who belongs to the lower end of the middle income spectrum) depending on the economy.

According to Michael Ettlinger of AmericanProgress.org, a strong middle class is the key to getting our economy moving. Why? Simply because majority of the spending consumer belongs to the middle class population. They can be a definite measure of a country’s economic performance. The middle class not only gives the country a face, it will also most likely define what it means to be a regular citizen of that land.

https://www.imoney.ph/

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=88870.0
Republic Act 8485 (Animal Welfare Act of 1998, Philippines), as amended and strengthened by House  Bill 6893 of 2013--- violation means a maximum of P250,000 fine with a corresponding three-year jail term and a minimum of P30,000 fine and six months imprisonment

Book your travel tickets anywhere in the world, go to www.12go.co

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