Saturday, July 12, 2008

some thoughts about oil and sin taxes

I recently read from the newspaper that the Bill and Melinda Gates Foundation donated a lump sum amount of 500,000 USD to the victims of Bagyong Frank. Utmost focus will be given to the affected areas in Ilo-ilo and another province I can't recall. They gave the money to the Bishop Conference I think so I guess it is sure to reach the poor. The distribution will vary according to the severity of the typhoon's effect in the families involved. Thanks Bill! I hope you help out more by funding preventive measures so we could avoid accidents like these. Also, I hope Microsoft starts giving various price schemes so students could purchase your software cheaper than the workers. I'm almost graduating so I could not take advantage of this but I think it will help solve or minimize piracy and computer illiteracy. Your man Steve Balmer could do this... =)

Off to the economic side of things. I saw in TV a proposal given by several UA&P (my school) professors about lifting the VAT from oil and imposing one in cigarettes. I heard this proposal is being rejected by the legislative branch. I do not know the full details and I would research on it but I want to voice out my take on the subject. The imposition of VAT on cigarettes would generate more than 50B pesos. The VAT imposed on gas generates more than 70B pesos. Even if the numbers may be overestimates, the VAT on cigarettes would still be big. Isn't it simple enough to understand? In addition, gas has an inelastic demand from the retail market and public transportation. It is very much in use to deliver goods and to transport something to somewhere. It therefore affects a whole lot of markets that are needed by everyone. If you ride the MRT, you'd really feel the effect too! There are too many people riding it. I won't be shocked if they raise the rates too! The MRT uses electricity but oil and coal are needed for electricity. Oil has high multiplicative effects on other goods and services. Cigarettes however would only affect a considerable amount of people since not all of us are smokers. It is also a hard vice to break so chances are, people would still consume a lot of the product. It would work! I have actually wanted higher taxes on alcohol too! I drink alcohol as well but I mean, it would still be good to pass on the taxes here so people who could barely eat three meals a day would have more purchasing power to leave a more decent life. Occasional drinkers would barely feel the effect and the party-goers don't really drink that much. Now, the alcoholics who are different from the party drinkers would still drink a lot. Promise! They would still get more money. Why do I say this? PEOPLE DO NOT STOP DRINKING OR SMOKING BECAUSE PRICES ARE HIGH AND THEY CANNOT AFFORD THE PRODUCT. THEY STOP DRINKING FOR HEALTH, FAMILY AND FRIENDS.

So there! I think it takes a whole lot of effort from the government and the civil society because oil might reach 200USD a barrel!

GRRRRRRRRRR!!!!!!!..........

No comments: