Third World country
A country cannot be termed as a rich country when only a few are rich.
LAST year saw the Philippines being upgraded by different international rating companies from a debtor to a lender nation. Everybody is happy and the Philippine Stock Exchange index reflected that confidence when the index shot up. People made paper gains out of their investments in the stocks or mutual funds.
On the other side of the coin, looking at the real side, why is it that we are still a Third World country? Isn’t it true that a country is progressive only if its citizens are progressive? A country cannot be termed as a rich country when only a few are rich.
Why is it that despite all the progress we made, the majority is still in poverty?
Enumerated below are some of the reasons:
Tax. Among the countries in the Southeast Asian region, we have the highest tax rate at 32 percent. Tax is one of the enemies of wealth building of the citizens but is the backbone of the wealth of the nation. Worse, our tax is not just one time. We are taxed from our income and we are also taxed on spending. This means double-taxation on our end. There is already a proposal by our lawmakers to reduce the tax rate, hopefully the Bureau of Internal Revenue (BIR) should not always think of their collection quota and go against the lawmakers’ initiative.
Corruption. The Philippines should have been elevated from the Third World status, if not for the rampant corruption in the government. No matter who our president is, if the system does not change, the corruption will be passed from dynasty to dynasty. Corruption is a major reason the BIR quota is going up. The government needs to recover the lost funds at our expense. They can no longer get back the lost funds so they have no choice but to tax us more. Just imagine the flood-control program and road repairs done last summer. The floods got even worse. One would think that the program was just for show and nothing was really done. The authorities will then say the reason there is flooding is because Manila is sinking. If that is the reason, then no amount of flood-control will solve the problem. The reason offered just shows that the projects done in the past was just a way to siphon money off from the tax we paid. The tax money, which should work for us, worked against us. If one observes, one can see that the projects funded are always the discretionary ones. Most of the time, government spending goes to the unnecessary and, oftentimes, to the pockets of the corrupt. If the government is the same as an individual who spends unnecessarily, there is no way for the country to become rich.
Financial literacy. Among our Asian neighbors, we rank the least in terms of savings. It is because the majority is not conscious of the need for financial literacy. The same goes for our government workers. If the government knows wealth management, then it can impose on people forced savings as it does taxation. There is truth to the adage “You cannot share what you do not have.” Financial literacy is slowly growing but with the support from the government, it can spread the program more effectively. An idea to bring about a win-win solution is this: The government reduces our tax, then makes a law requiring the citizens to save it in mutual funds (aside from Social Security System and Pag-IBIG). Since mutual fund is a corporation, the government can collect taxes from it. The more the people invest in mutual fund the higher the tax collection by the government. That way, both the citizens and the government benefit. There will be less poverty and the government collects taxes. The government can also invest the excess fund in mutual funds. When the funds grow, the government needs to get less from us but still can manage to fund their future projects. Singapore is one example of that. Even though it is only a tiny nation, it is so prosperous because both government and the people are well off. By the way, Singapore has one of the lowest tax rates in the region and even their government has its sovereign wealth managed professionally.
Action. We always hear the saying “Nasa Diyos ang awa, nasa tao ang gawa” and “God provides.” Unless we act, there will be no result. True, God provides. He provides solution but we have to apply it for it to bear fruit. We can see it in the story of Joseph (son of Israel) in biblical times. God gave us solutions and instructions about saving for the coming famine. Had Joseph done nothing, for sure all of the people would have died of starvation. As the legendary martial artist Bruce Lee said, “Knowing is not enough, we must do. Willing is not enough, we must apply.”
By applying the proper knowledge in finances, we can collectively help our country become a Second or First World country by properly managing our finances and striving to become progressive. A progressive country is composed of progressive citizens. This new breed of citizens is what we call investizens.
Edmund Lao is a Registered Financial Planner of RFP Philippines. A sales engineer by profession, he is an advocate of financial planning.
Source: http://www.businessmirror.com.ph/third-world-country/
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