Philippe:Let’s talk about specifics. What do taxes do for the country? Number one, of course, these are salaries of our public service. We fund public services. Siyempre, building of the infrastructure.
Something that’s very important is also we fund healthcare system. Education, right? They run on our taxes. Safety, the policemen, the firefighters, all of that paid for by our taxes.
Philippe: Now, last November or October, they were trying to propose na abolishing 12% VAT, it could be possible. But abolishing 100% of the VAT will cripple our economy also. If we need to abolish the tax system, at least leave 5% on the table.
5% is to fund, what if my sonu, who’s gonna pay for our firefighters? What if there’s crime? Who’s gonna pay for our policemen? Who’s gonna pay for our army, our defense?
Philippe: What’s gonna happen? Right now, if it passes, our country will crumble. So, we know how important tax is in a country.
Technically speaking, a tax, any country that taxes their citizen, is a form of a way how they could earn from the citizen, so that they could promote, they could start projects for the country.
Philippe: And that’s how we pay their salaries, that’s how we pay for their service, hence the term public servant. So basically, the government is taxing us so that we could pay them, and that in return,
Apart from paying their salaries, in return they could fund the projects that’s needed to improve the country and the well-being of the citizens of a country.
Philippe: One of these taxes is VAT. And then, there was a bill proposed last year, I believe October, was the abolishment of the VAT. I think this was Bill 1450 from the Senate, proposed by Senator Robin Padilla.
And then there was an amendment, I believe, that happened last November, they’re proposing to abolish the 12% VAT off all consumer items, everything generally. And you mentioned earlier about the 3% abolishment of, what was that?
Mclaine: 3% abolishment of…
Philippe: Oh, the 3% gross quarterly sales tax on non-registered taxpayers who are VAT exempt due to gross annual supplies of specific goods and services not exceeding three million pesos. So ito yung mga 3% if you don’t exceed three million.
You don’t have that. You don’t have that. So these are the businesses that are gaining traction, that are bringing a lot of income and all that. So that’s additional 3%.
Philippe: Also, siyempre other taxes like corporate tax, there are so many other taxes, but the most known by most people and businesses all around is VAT. Now, generally speaking, what do taxes do?
Let’s talk about specifics. What do taxes do for the country? So number one, of course, these are salaries of our public servants. So public servants go all the way to the top. The head of the leaders could be a president, could be a king, could be whatever.
Philippe: It could be a prime minister, depending on what country, what their political structure is. But basically, we pay for their salaries. So that’s one. Number two is, of course, we fund public services. So, for example, the trains that we have, the MRT. What’s the other one? Not within the metro?
Mclaine:PNR.
Philippe: PNR. Not only trains, but also operations of, let’s say, stoplights, operations of the whole metro, the whole province, the whole Philippines. So that is basically what it funds. But also, number two is, of course, building of the infrastructure.
We fund the infrastructure. We fund the bridges. Forget the expressways because they’re privately funded. But basically, we fund the bridges. We fund maintaining the streets. Basically, all the urban planning, all the urban projects.
Philippe: That’s how our taxes, that’s where our taxes go to. Apart from that, which is something that’s very important, is also we fund healthcare system. PhilHealth, public hospitals, they run on our taxes. Education, they run on our taxes.
Safety, the policemen, the firefighters, all of that paid for by our taxes. This is what, this is how a country works. So think of a country, it’s like a big business. In order for it to run, we have to have sales.
Philippe: Sales, that’s where it comes from. So that’s generally where our taxes go to. That’s what we pay for to be able to live as a citizen in a specific country, just like the Philippines. Now, last November or October, they were trying to propose to abolish 12% VAT totally, 100%.
So 12% VAT will become zero VAT. Maybe in a perfect world, that could happen if we were in a monarchy, and we have lots of gold, lots of fuel, maybe.
Mclaine: Or maybe if there’s no corruption at all. It is possible.
Philippe: It could be possible. But abolishing 100% of the VAT will cripple our economy also. That’s one thing, right? Maybe half is okay. Someone proposed 10% all across the board. I’ve seen all the taxes. It makes it easier for everyone.
What’s a 10%? Ang inano nga nila sa Bible nga is that you’re 10th, you’re 10th, right? 10% lang. And that’s all that’s needed. But this one, they want to abolish 100%. Looking at it, I’m not an economist.
Philippe: I am not someone who is an expert in this. But imagine you run a business and you’re not being paid for it because you’re doing the business 100% with your own expenses, and you’re not getting any sales out of it. Eventually, you’re going to crash. So like I said, I’m not an expert.
But if we need to abolish the tax system, at least leave 5% on the table. 5% is to fund. What if my sunog? Who’s going to pay for our firefighters? What if there’s crime? Who’s going to pay for our policemen? Who’s going to pay for our army, our defense? What’s going to happen? Yeah, there are other ways to get the budget.
Philippe: But you lower the budget. What are we going to get? You know 5% is too low. Get that 6% from 12 to 6. You mentioned earlier na, at least 6% naman yung tax system. I think we just got so greedy enough. Uy, wala. Dami-doblin natin para maging 12 at yung kalahati mapunta sa bulsa natin, right? What are your thoughts about it?
Mclaine: Maybe, in a way, may point kung bakit gusto nilang i-abolish. Pero, mapifeel siguro nila, if this is going to be approved, siguro, in a few months or in a year, mararamdaman yung changes.
Pero, just like what you said, dun kinukuha yung pambahid sa public officials or any projects. If hindi mo pupuha nito, parang kumpanya. Sa isang kumpanya, mga trabahador, pag hindi mo pinasahod nang maayos, unti-unti mukha wala yun. Magka-crash yung company.
Mclaine: The company would continue to operate, pero dun na magsisimulang magda-die down yung takbo ng expense, pati yung pamamalakad sa tao. Magugulat ka na wala na pumapasok kasi nga wala na sumasahod.
So, lumalabas, parang no work, no pay. So, hindi nyo kami binayaran, hindi kami pumapasok. So, yun nga, that would gain a lot of effect para sa Pilipinas, especially sa national government. Mas mabilis mararamdaman yan.
Mclaine: Yung mga taong, mga citizens natin na hindi familiar sa ganyan, parang hindi nila mararamdaman, wala silang pakialam. Pero the majority, lalo sa ano, mabilis makikita yung magiging changes na yan.
Kaya maybe there is a way na magkaroon ng win-win situation. Tama sabi mo, pwede kalahati lang. Parang mayroon pa rin tayong pagugutan. Pero like nung nabanggit ko nga kanina, if there is no corruption, we have so many budget.
Mclaine: We have billion, trillion. Maybe pwedeng walang VAT. Pero given the fact that corruption has been in our system for so, so, so long, long, long time na, hindi naman tatanggal yung corruption. Pero yan na. Let’s see what the Senate or the reviews would end up.
Philippe: Right now, everything is extreme. Extreme corruption, extreme solutions. Kawawa yung mga citizens, kawawa yung mga Pilipino. Because extreme kasi, binulsa nila, mga contractors, binulsa nila yung mga pera ng taong bayan.
Right now, gusto nila tatanggalin just to fight that situation. These are all valid solutions, but this is not long-term. This will not work in the next decade. Kung walang magbabayad at sasahuran, no one’s going to… who wants to get into leadership just because they want to lead?
Philippe: You need to be compensated for that, even at least compensated very low on it. Just like you said, a company—kung hindi pinapasweldo yung mga tao, aalis din yung isa-isa. Matitira the only one who believes in it, and which is not enough kasi wala na manpower.
You need a whole team to operate. You need expenses. Number one, yung healthcare. Without that, ang daming mamamatay. I’m not against this bill. All I’m saying is that they have to revisit this bill.
Philippe: They have to look at the long-term, make something fair out of it fair for the government, fair for the people. Balance it. But a win-win. This is just an extreme proposal. It’s a very extreme proposal. Right now, if it passes, our country will crumble.
For sure. We won’t feel it in the first year, but after that, when governments start… there’s going to be more crime, to be honest. Why? Government officials are going to want to be more corrupt. The only thing they have right now is power.
Philippe: They don’t have money, right? If they don’t have money but they have power, they could enforce whatever they want. I’m not being paid to do this, sasabihin. I’m not being paid to do this. I don’t want to do business.
I’ll use my power and my influence to do business and earn me millions. You guys are not paying me enough to do my job. I think that brings more problems to the table.
Mclaine: Than solutions.
Philippe: Exactly. So, like I said, this is just a band-aid solution. They should think of… look, I’m fine with paying taxes. I’m only fine with paying taxes so long as they use that tax money, whatever we’re paying, into something very good that will benefit everyone me as an individual and the whole Philippines as a country.
Dapat may benefit. Okay, let’s talk about what if this was a perfect world. Sabihin natin, hindi naman mawawala ang corruption in any country, pero the percentage can go very low. So sabihin natin, if we have, I would say our corruption rate is, let’s say, at 90 percent.
Philippe: If we could reduce that by half, sabihin natin 45 percent na lang, maybe we have working flood control projects at least. Baka mas less ang kailangang ayuda. We’d feel the effects. And I think they have to focus on long-term.
Like you said kanina, if there was no corruption in a perfect Philippines, where do you think the Philippines is right now? Siguro first world na tayo. Parang tayong Singapore, parang tayong Hong Kong, parang tayong Malaysia.
Philippe: Maybe less poverty, people are happy, crime rate is lower. Actually, crime—automatic, you don’t need to do anything about crime. When people are happy, crime rate goes down. If our healthcare was great, imagine, you go to a hospital, you get sick, free.
Hindi ka stressed. Karamihan ng namamatay, nag-stress sila kasi sa babayaran nila. Okay, meron tayong zero bill right now. But how long is it gonna last? Pag naubusan na tayo ng pondo, wala na. Right now, they can justify zero bill.
Philippe: Nakasakit ka, you go to a government hospital, you can get out kahit wala kang pambayad, basta isi-zero bill nila. You go to the Malasakit kiosk, they’ll help you process your paper, tapos. But what if generally speaking, everything was running like that?
We would invest our time as citizens building our economy, building our country. Mababawasan ang mga OFW. We’re gonna develop better skills that will pay us better. For example, we could be leading in AI. We could be leading in customer service locally.
Philippe: We could be leading in manufacturing, just like China. Why did I mention manufacturing? Look what’s happening around this is year 2026. Trump raised trade tariffs towards certain countries. Tinaasan niya, tinaasan na niya ang Pinas.
Why is he doing that? Did you know that Trump’s main goal right now is he wants the US to be a manufacturing hub? Gusto niyang gayahin na parang China saan tayo papagawa? China. Gawa tayo ng maraming electronics, saan tayo magpapa-assemble? China.
Philippe: He wants to bring back the idea that if you want something great, you go to the US. We manufacture it in the US. Look at Ford. When it comes to their cars, American muscle that’s why people buy, kasi American muscle.
But if you buy Ford in Asia, it’s not built in the US. Maybe the bigger cars like the Chevys, the Suburbans, the Expeditions, the F-150, 350 American made. Harley Davidson, American made. But you buy the Everest, Taiwan assembled in Taiwan, manufactured in Taiwan, parts from China.
Philippe: He wants to bring back the reputation that you do it in the US for quality and cheaper not necessarily cheaper than China because China is on a different level but he wants future trade, manufacturing, and the economy to grow by doing that. And what’s the effect of that?
He’s trying to weaken the US dollar currency right now. So what does it mean if it weakens? OFWs will want to come back. Kasi kung ang dollar rate natin nasa 59, 80, 60 for $1, ang $100 mo makukuha mo around 5,800 to 6,000 pesos.
Philippe: Kung humina ang dollar currency, which is what they’re doing right now, ang $100 baka hindi na 6,000 pesos. Baka 4,000 na lang, baka maging 3,000. And you’re like, ba’t ako mag-OFW? Eh sa Pinas na lang mag-work.
Mclaine: Mataas pa.
Philippe: Mas mataas pa. But it doesn’t mean that our peso currency lumakas. Humina lang ang dollar. And that’s globally impactful. It will impact every country and everything because the dollar is so weak that with your own currency, you could buy a lot of stuff from the U.S.
Ang Air Jordan, sabihin natin sa U.S., let’s say $200. Kung dati ang $200 in Philippine peso is, let’s say right now, kung 12,000 pesos siya. And humina ang dollar, mabibili mo lang siya ng sabihin natin 6,000 pesos. Oh my God, that’s half.
Mclaine: Dalawa na.
Philippe: Dalawa na. Pupunta ako sa U.S., doon ako bibili. Pa’to ako bibili deal sa Green Hills? Doon ako bibili. So where does the flow of money come back to? The U.S. Not everyone knows about this.
Most, I only know this because I have a friend who is an economist; he tells me stuff. And of course, all this geopolitical news happening all around—they’re really fighting for a bigger win in the future because the U.S. is not…
Philippe: They’re still the superpower now, but with Trump’s vision and goals and everything, he wants the U.S. to have more. He wants to make sure that the U.S. can leverage other countries.
That is what China did. Alam ko medyo lumayo na tayo sa topic, but in the beginning, that is what China did. And right now, China is the rival of the U.S. in terms of economic growth, in terms of power. It used to be U.S. and Russia, right?
Philippe: Right now, Russia aside, China is the most they’re ahead in AI, robotics, manufacturing, technology, everything, even construction. Number one, China is building bridges. Number one. Diba? Si Japan kilala sa subway. China, bridges. Building bridges, long bridges, from one mountain to another, gratis. Isa mountain.
Mclaine: Yeah, tapos ang pinakamata-taas ng mga bridges,
Philippe: Under the sea pa. My point there is, in the beginning, China had low labor costs. The currency of China was weak—na-weaken nila. So, pag naging weak, people started, other companies from the U.S. and Europe, hinahire ang Chinese kasi mura.
Diba? Noong dati, hindi siya masyadong quality, pero over the years, naging quality na din. That’s why napunta yung mga big brands, like mga luxury brands, doon na sa China. Mga sports car sa China na.
Philippe: Diba yung mga parts and everything in China? BMW’s parts made in China. So, what does China have right now? Yes, China has leverage. Do you know China, when basically in Africa, the continent of Africa,
China funded so many projects there that they basically own half of Africa. Oh, they went to Africa, I don’t know which country specifically, but they went to several countries that needed help to fund new buildings, new bridges, new infrastructure, new cities.
Philippe: Chinese funded it. So, when you fund something, who owns it? You do. So right now, China has that they have leverage in Africa. So, if Africa, if the world goes to war, where does Africa go?
Mclaine: China.
Philippe: Exactly. We own your cities. We funded it. We control it. It’s our technology. We can control it with AI, with our AI. See? But it took China several decades to make that happen. Trump is going after that.
We’re affected. So, if we’re affected, remove the VAT, our currency will go strong, right? That’s impactful to us. OFWs, they come back home. But what’s going to happen? Nobody there’s no help. Number one, there’s no help. Okay. For me, great, there’s no help.
Philippe: Number two, if there’s no VAT, okay, our economy might grow because I won’t pay anymore, I’ll just do business. Right? But that’s going to be a perfect world for just a couple of years. After that, we’re going to feel the effects.
Your people will be affected. Let’s say you have a big business, manufacturing, for example, chips or juice. Of course, you have people, you have manufacturing. If there’s a pandemic, or there’s a disease like this one, Nipah, whatever virus, if you have 100 people, you’ll pay for their healthcare.
Philippe: If you don’t pay, they’ll leave. There’s no PhilHealth, there’s no fund, there’s no government funds. Where will they go? Government hospital? There’s nothing, there’s already a payment. Right? That’s the impact about it.
Now, if there’s a VAT, or if there’s a PhilHealth, and there’s a fund, at least half of it will go to PhilHealth. At least, right? At least, you’ll pay half of it, depending on what you’re talking about with your people. But my point being, remove the VAT totally.
Mclaine: One by one, it will collapse.
Philippe: In time, it will collapse. Plus, what’s happening now with the US, which we have no control over, I say, keep the VAT, keep everything as it is right now, catch all of the accountables that are happening recently, or, not keep it, do the proposed 10%. 10% is okay.
I think that’s a win-win. With 10%, hire a special type of government department to manage the funds. Department of Finance. Sorry, but you’re called the Department of Finance so you could manage the finances of the country and make sure it goes to the right pockets.
Philippe: The problem is you’re releasing the finance. Okay, if it goes to a good project, it will help our economy, but they have to, DILG has to go from up to down and all of that. They have to manage the funds properly.
If they did that, probably, the Philippines would be the first world country in the world. Probably, the MRT a world-class train. Probably, our Air Force, military, our Air Force, our defense, we’re going to be the top in all these sectors. Transportation, tourism, tourism is number one.
Mclaine: During Marcos,senior we were number two. Versus Japan we were the second in Southeast Asia. We have the most sophisticated aircraft before. Tayo yung pinakamarami during Marcos. If nagawad before.
Philippe: We used to export rice. We taught the Thailanders how to farm rice. And the Vietnamese, we taught them how to farm it so they could grow their own rice. And now we’re buying it from them.
Mclaine: We teach them to plant rice so that we could buy the rice that we planted. It saves our magsasaka pero with the cost of the money. Okay.
Philippe: I’ll teach another country so I could buy from them instead of using my people as farmers. Then these farmers, I’ll teach them AI so they could flourish the country. Teach them technology.
Teach them anything that is innovation in short. Pero hindi. I don’t think this will pass. Number one, corrupt officials will not approve this. But, they’ll not approve it. Saan tayo makukuha ng pondo? Saan tayo
Mclaine: kukuha ng kickback natin?
Philippe: Exactly.Isa pa yun.
Mclaine: Yun yung pinaka-point doon.
Philippe: Isa pa yun. Listen, let’s talk about more. What else can the Philippines have? I was in Hong Kong recently and world class. World class. Low crime rate. Hindi sila madamot sa isang bagay.
When you’re traveling these days, importante sa’yo yung internet. Hindi sila madamot. Anywhere you go, free internet. Whether nasa mall ka, nasa train station ka, nasa tawag doon sa MTR, nasa mall, kahit saan.
Philippe: You don’t need to subscribe. Free wifi. And walang limit. I stayed there three hours sa mall, ikot-ikot. Paglabas ko sa train, automatic na connect siya sa wifi ng train, sa station, sa bus, meron.
Pagbalik ko sa same mall, hindi na kailangang i-verify, naka-connect na ako sa hotel. Hindi sila madamot. Eh dito, yung ano mo. Register your number. 15 minutes, 30 minutes, 1 hour max. After that, pag tapos na yung 1 hour, wala na. Register again. Register again.
Philippe: Different number. Get the OTP. What the hell? Doon palang world class na para sa akin. Ibig sabihin, convenient na. Ibig sabihin, oh, I wanna buy more stuff here. I wanna live here. I wanna put my money here.
The more money we put in a certain country, the more… Sila kasi, they know how to manage your finances. And they know, dapat improvement dito para pumasok yung investment. Ganun lang naman eh. Look at Dubai.
Philippe: Dubai doesn’t have zero VAT. Corporate tax is the lowest in the world. In Dubai, or the UAE in general, their taxation is less than 10%. So what does these companies from the US, from Europe, from Southeast Asia, and from Asia, why do they open a business in Dubai?
Because, like here, instead of opening a corporation in the Philippines that will tax me 25%, I go to Dubai. World class facility. World class city. World class transportation. Public transportation. World class labor.
Philippe: Cheaper tax. I save 25%. Sabihin natin 6% lang yung ano doon. I save 19%. That 19% alone. In my pocket. And I’m happy. And, free healthcare. Sa mga investors, free healthcare. You shake hands with other, prominent people doing business diba? In return what happens to Dubai in the UAE? More money comes in, more they build their cities better, their into robotics now, everything is hightech. What happen if we did that here sa pinas. Gosh.
No more OFW, no more domestic helpers, no more pupunta ako sa ibang bansa kasi mas mataas, doktor dito dun na ako sa US, 10x yung sahod ko compare dito, health care pa dun maayos pa, anyway. I’m not for abolishment of VAT, I am balancing the tax rate kung 10 acceptable, lower not so much, half is fine, 6% watch investors coming. More investors, dun sila kumuha ng kickback from the investors, for God sake wag sa mga citizens natin.
Mclaine: Ang problema nga since pumutok tong flood control, madaming investors ang takot na, doubtful na. 50-50 na yung ano nila.
Philippe: So look what happened? Wala na, hindi na pumapasok ang pera, kokonti lang. Mga OFW, nalaman nila, ay di na ako magpapadala sa Pinas, dalhin ko nalang. Kasi pag pinadala mo, may charge ka pa, pag pinadala mo, more than a certain amount, i ququestion ka pa diba?
Ay wag na dadalhin ko na lang pamilya ko, dalhin ko na lang sila dito sa New Zealand, sa Finland, sa Europe sa US, wag na dyan, mabubulok kami dyan sa Pinas. Wala. Anyway, I think that’s good enough, any other thoughts?
Mclaine: That’s it.
