Part 1 Taxes and Fees in Stock!

"The only permanent things in this world are death and taxes".

What are Taxes?

Tax came from the Latin word "taxo" meaning I estimate. It is compulsory. Failure to pay tax may result into penalty and in some cases, you may land in jail. Taxes are burden laid upon individuals or entities to support the government. It is an enforced contribution in the form of toll, customs, duty, excise, subsidy, aid, penalties, etc. It is payable through money or in kind.

Why Does the Government Need Taxes?

The government needs to pay the government employees. During my grade five and grade six years, I went to the public school. That was the time when Mt. Pinatubo erupted and we need to evacuate to other provinces. My family went to Nueva Ecija and stayed there for a few months until the rains of ashes, sand and rocks winds down. Eventually, we went back to our hometown and settled in higher areas. I spent my elementary days there for two years. Back then, I had this wonderful principal and a hosts of teachers who have been selflessly teaching us in Values, Ethics, Science, English, Math, and Hekasi. They even offer encouragement, motivation and guidance to every student that falters. In essence, they are my unsung heroes. Now, these teachers hired by the government to teach children on basic education are getting their salary from the government. They need those salaries because they also have families to feed. Without these teachers, how in the world can poor families afford to send their school to private school? I am a product of the public school and I am proud of it. These public schools are a necessity in our country and education system. If we need public schools, we need the great but humble teachers. These teachers need salaries for their family. If they need salaries, the government needs to pay them because they act as the employer of the teachers. Thus the government needs to raise tax in order to pay the teachers salary.

 

Government has 1.1 million employees

Now, imagine the 1.1 million government employees we have in our country. If for illustration purpose only, the average salary is 10,000 pesos a month, the government needs to pay 10 billion pesos per month for salaries alone! In one year, our government needs to pay 120 billion pesos for salaries. Actual spending of the government last 2009 is 414 billion pesos for personal services.

 

Government Expenditures

Salary is just a portion of the government expenses. Just like any company, the government has to pay electric bills, water, telephone, etc. Major expenses are automated elections, scholarships grants, fiancial support to PEZA, PNP arms upgrade, NFA rice subsidy, assistance to local government, interest payment on loans, etc. Also, it needs to finance projects like building roads, bridges, hospitals, schools, government buildings and structures. These projects are worth billions of pesos.  Last Year 2009, the government spends a staggering 1.422 trillion pesos.

Corruption

Guys, corruption is part of the expenses I think. Some people say 30% of the budget goes to the pocket of the politicians. The rest are spent on in good faith.

Government needs taxes to support its expenditures

Since the expenses incurred last Year 2009 is 1.422 trillion pesos, the government needs any monetary benefit it can get to meet those expenses. Unfortunately, most of the times the taxes collected are not enough to pay the expenses. They call it budget deficit. That is why in every transaction we make, there is tax. You buy at Jollibbe, you pay VAT. You buy a cigarette, the company already passed to you the sin tax. You go abroad, you need to pay travel tax. You buy stocks, you need to pay taxes. You sell stocks, you need to pay taxes.