Budget and Taxes

The Laffer Curve of Philippine tobacco taxation May 22, 2023 | 7:08 pm My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/05/22/524267/the-laffer-curve-of-philippine-tobacco-taxation/ One important concept in Public Finance Economics is the Laffer Curve. It shows a bell-shape relationship between tax rates and revenues: as tax rates increase, revenues also increase initially then plateau at some point and start to decline after. The concept was developed by US economist Arthur Laffer. Consider income tax. At 20% to 30% tax, people would tolerate it. But as income tax rises to 40% and higher as their income rises, some people would reduce work to an income level where the tax rate is only 30% or lower and instead enjoy more rest. Other people would misdeclare their real income, like getting a second or third job and not declaring it because their tax rate would then jump to 50% or higher. This undeclared, unreported income is considered among “underg

The Philippines had fastest GDP growth in the world in Q1 May 15, 2023 | 6:00 pm My Cup Of Liberty By Bienvenido S. Oplas, Jr.  https://www.bworldonline.com/opinion/2023/05/15/522874/the-philippines-had-fastest-gdp-growth-in-the-world-in-q1/ While many sectors and economic observers in the country tried to play down if not criticize the “low” GDP growth of 6.4% in the first quarter (Q1) this year as reported by the Philippine Statistics Authority (PSA) last week, it was actually excellent growth by global standards. Why? As of yesterday morning, I counted 29 economies that reported their Q1 2023 GDP data. The GDPs of both the Philippines and Ireland were 6.4% and these countries were in the top spot. Next was Malaysia with 5.6%. Four of the 29 economies suffered contractions: Germany -0.1%, the Czech Republic -0.2%, Taiwan -3%, Lithuania -3.7%. The United Kingdom and Singapore both had almost flat growth at 0.2% and 0.1%, respectively (see Table 1). So, congratulations, Philippine entr

Declining inflation and the budget deficit May 8, 2023 | 6:12 pm My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/05/08/521539/declining-inflation-and-the-budget-deficit/ Last week, the Philippine Statistics Authority (PSA) released the inflation rate for April — 6.6% — and it was a significant decline from 8.6% in February and 7.6% in March. Following this trend, this column projects that inflation will be around 5.5% for May this year. Based on January-April data, the G7 industrialized countries (except Japan) continue to have high inflation rates, led by the United Kingdom (UK), Italy, and Germany. For East Asian economies plus India, the Philippines has the highest average inflation rate this year. During the same months last year, India and Singapore had the highest inflation rates (see Table 1). From the PSA data, we see that the top three sources of high inflation in March and April were alcoholic beverages and tobacco, food and non-alcohol