(Speech delivered by Bishop Norberto L. Mercado, the Chairman of the Foundation of Strategic Economics and Bishop of the Council of Overseers of the Nations Evangelization, at the National Press Club, April 10, 2008)
Distinguished members of the media, ladies and gentlemen, good morning.
I am here this morning in your presence, ever conscious of the fact that today, many Filipinos are economically hard-up.
I came here not to pronounce judgment on persons or on the government, which is very easy to do, but to provide a solution to our economic problem.
I came not to curse the darkness, but to light a lamp and put this lamp out in the darkness.
The Lord Jesus told us that He is the Light, the Brightest Light, and that His followers should also serve as the little lights. He commanded us to put out our light , and not to hide it , so people can and will see through the light.
We have been in the economic darkness for years and decades. We have heard our countrymen say that “life is very difficult” for them.
Is there a solution to our economic difficulties?
I believe there is.
LOW FAMILY INCOME, SPENDING, AND SAVINGS
Filipino families as a whole have a very low gross domestic income, which is among the lowest in the world.
No wonder that we also have low gross family spending and low gross family savings. These only reflect the annual low gross income which we derive from our salaries or businesses.
We should ask each presidential candidate in 2010 this question: “How will you increase family income when you become the president?” As voters, we have the right to know their answers .
If you ask me this question in 2010, my answer is simple: I will eliminate the personal or individual income tax. Once I get elected as the President of the Philippines, I will first suspend the implementation of the National Tax Code on the individual income tax, and ask Congress to amend this law and remove this tax.
THE MERCADO FORMULA
The removal of the income tax is one distinctive of the MERCADO FORMULA, which is my formula to our economic liberation as a people.
The MERCADO FORMULA is WEG + HIS + BP = SEG.
The acronym WEG stands for Wise, Exemplary, Godly and Good Government.
HIS stands for Higher Incomes, Spending, and Savings for consumer sector, the business sector, and government.
BP stands for Better Productivity both in the quantity and quality of goods and services produced in the economy.
SEG stands for Strong, Sustainable Social and Economic Growth.
By 2010, the government says that there will be more than ten million (10,000,000) Filipino income taxpayers.
To attain higher income for the families of more than 10 million income taxpayers, the MERCADO FORMULA states the indispensability of removing the income tax. Without the abolition of the income tax, Filipino wage earners will continue to have low incomes, low spending, and low savings.
THE CYCLE OF POVERTY
And what is the effect of low family income to family livelihood and to business?
The answer is of course very clear : low family or consumer income results to low spending and family hardships.
This is equally bad to business, for poor sales means poor business growth.
Filipino families have very low savings per capita income, among the lowest in the world. Why?
The answer is simple : we have low incomes. And we have low incomes because we are heavily taxed. We pay the income tax. We pay the real estate tax. We pay the excise tax. We pay the value-added tax.
And no wonder that we have high prices on goods and services in the country. If the prices of goods and services are high, and the incomes of tens of millions of Filipino families are low, then there is the cycle of poverty grinding against us.
The government of the Philippines recently admitted that there are more poor Filipino families in 2007 in proportion to the total population than at any time in our history despite the improvement of the economic climate.
The government cited three reasons for this phenomenon: higher taxes, higher prices, and typhoons. And we should consider corruption as another major cause of poverty in our country.
WE MUST ELIMINATE THE INCOME TAX
This is the reason why the Filipino voters must wage an all-out effort to eliminate the income tax.
If we succeed in removing this tax, the salaried Filipinos that form the bulk of the middle class will have higher income than they have today. With a strong middle class, the poor will directly benefit from them thru the increase of employment opportunities, and thru the sales of goods and services from the latter.
With higher income, Filipino families of income taxpayers will have more money to buy the goods and pay for the services which they need.
This is good for business – for big business, medium business, small business and micro business. Higher sales of goods and services will dramatically increase the incomes of big corporations, medium-sized businesses, small and micro enterprises. And the surge in the demand of goods and services will open the floodgate for more jobs.
Consider this : the combined number of unemployed and underemployed Filipinos has reached four million and seven hundred thousand (4,700,000) in number. That is the official government record. The unofficial datum may have more than that number.
Now, if the government will stop collecting the income tax, and more than 10 million Filipino income taxpayers will be taught and encouraged to start micro businesses, and employ even just one person in their business, then the government can wipe out the problem of unemployment in the country.
Better employment means better productivity. The abolition of the income tax will greatly reduce, if not wipe out, unemployment which will result to better productivity.
High unemployment, on the other hand, results to poor productivity.
Unemployment results to extreme poverty. The government has to solve the problem of unemployment if it wants to wipe out poverty among our people.
In addition to the removal of the income tax, the MERCADO FORMULA’s other features include:
1. The removal of the Real Estate Tax (Land Tax) imposed by the government on inherited agricultural, residential, and commercial lands which are worth less than P50 million;
2. The incremental reduction of the E-VAT on food items;
3. The incremental reduction of taxes imposed on power and electricity;
4. The incremental reduction of taxes imposed on gasoline, oil, and petroleum products.
5. The streamlining of the bureaucracy in our war against official corruption and government wastes.
I want to see a trim and fit government.
I want to see poverty minimized if not eradicated in the Philippines. Other nations like Japan, South Korea, Singapore, Malaysia and Brunei have solved their problem of poverty.
I believe that we Filipinos can also solve this problem in our country, for we are not less talented and less committed in solving our problems .
I want to see high income for Filipino families, higher growth in business, and a rich government in that order.
I believe that the government should be rich because of a rich people, and not at the expense of the people. A government which wants to be rich at the expense of its people is not just an anathema but an evil, for it gives out false hopes.
By the grace and might of the God of Israel, the Creator of Heaven and Earth made known thru our Lord Jesus Christ, I commit my life to the eradication of poverty in our country. Let us rally our people to this cause and ask the good Lord to help us.
Thank you.
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