Financial Awareness in the Family

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source: morguefile.com

My siblings who are based here in Metro Manila went home to our beloved province of Pangasinan for our mother’s birthday. Most of us are already in the mature age bracket and often times we talk about various issues ranging from the barangay and clan/family issues to the national issues that we hear in the news.

One of the issues tackled is about taxes. Based on the discussions the true population segment that suffers the burden of taxation falls on the middle class. It is funny to note that the poor sector complains a lot though they don’t contribute to the economy due to the lack of employment/business. On the other hand the rich sector at times avoid taxation. With the news regarding tax evasion and other tax privileges of companies, it seems that the rich can easily avoid tax. Thus the middle class, which where you and I belong, suffers much of the tax burden and thus in reality we are the true citizens that fund the government.

Thus the issue of new tax laws that should ease the taxation on the middle class has been one hot topic in our family. I myself as a certified public accountant agree. The issue is that much tax is being deducted in middle class salary, thus preventing this segment from truly maximizing their buying potential. I do agree on the worries of the BIR commissioner that if tax rates are lowered, the government might not be able to fund its functions. That is why we need to make better tax laws that shifts the tax base. If taxes collected from middle class are reduced the most likely effect is that the additional buying capacity will be spent on personal wants thus taxes should be shifted to such commodities or to corporations who sell those kinds of products. Another scenario is that with such additional cash, middle class now can be enticed to invest extra money for the future.

Another issue touched was regarding the disparity of the rich and the poor. One comment that was discussed is that from SM that the Philippines need more malls. Of course, if that is the case, small business who rely on such sale that the mall will cover will close down and thus will add to the number of people who might end up in the poverty line thus creating a society of poor communities. Also, there is a fear of people resulting to crime like stealing just to have something to eat. At my end I pointed out that yes big companies will overtake small business and force them to close so the solution is to invest in these big companies.

But the issue is that not all are aware of such. Also, these small businesses rely on the small earnings they get from their small enterprises and thus it might not be possible for them to avail of such investments. The problem with the Philippine population is that there is no discipline to save thus the little that they have is spent for their needs at times on wants since they wanted to taste the feeling of the rich of having gadgets or vacations.

Also, most won’t be able to accept other jobs or other income streams since we are at times to proud of our statuses. At times it is funny to know that a Pinoy in other countries might be doing 2 to 3 odd jobs just to have money to send back to his or her family. But when he or she comes back here he walks like a millionaire, bringing or buying the drinks every other night for his/her long time no see neighbors/relatives/friends. They would even buy expensive stuffs for their love ones or children to show off to others that they are “abroader”. And in the long run they have no actual savings even after having several jobs because they never save.

Also Pinoys are too proud to be taught. If one has ideas and you offer it to others, they would shun you thinking that the other offering such ideas are “mayabang porket nakapag-aral” or show off “kasi nakaka-angat sa buhay” and never considered others situation. Most Pinoys are not open to the ideas of investment and savings because they want easy money and that they think small always. They would rather go to scams which promises high returns overnight even after such was already said to be scam.

Such discussions might be bizarre or out-of-place but I hope in the coming months and years you have such discussions in your family reunions rather than gossip about your neighbors or relatives. At times it would be a very argumentative discussion because most Pinoys will always flaunt their riches, espeically between siblings or even yet at times they would corner a sibling that is “nakakaangat” and would bully him or her to pay the family related expenses(tax on land, retired parents living expenses, etc.). There will be a few times of possible business partnership but often times having your sibling or relative as a business partner is not a good idea due to issues with sharing that is why I suggest that there should be a formal legal contract always in between partners even though you are siblings or related so that a clear division of everything is in place. There is no such things as “gentleman’s word” and “sealed with a handshake” transaction. Always have it notarized so that in the end there will be no regrets when your own sibling or relative runs your funds or fail in his or her part in the business.