Assessment of the stability of the RP government decision to collect VAT on toll fees.

Last October 1, 2011, the government started to implement 12% value added tax on toll fees. This issue was a hot topic during that time because of the sudden law that was implemented which is said to have is no legal basis since toll fee is tax itself. Personally, we both have positive and negative thought about this.

Many groups and Filipinos are not satisfied with this RP government collection of VAT on toll fees. There are a lot of questions that keep on playing in their minds, like where do these collections go? Why there is a need to add VAT to toll fees? Isn’t there are many investors in our country and some powerful and rich government officials why not ask them to pay their taxes? Isn’t just another way to get more money from everyone? You can’t blame most of the Filipinos why they are protesting about this decision. Because as we all know, we are experiencing economic hardship, 12% VAT to toll would only raise the cost of basic goods or commodities being transported through expressways. This will be a burden to poor Filipino people. “Mahirap mabuhay ngayon” – we always hear this line. This is true, because we’re living in a country that does not have a stable economy or should we say a good government though. 


VAT is regressive because it doesn’t distinguish between rich and poor. It similarly taxes everybody who buys or uses a certain product or service, regardless of whether the amount of tax creates a big dent into their pocket or hardly a dent for those who have thick wads of money. We are all affected with this tax collection.

That’s why we disagree to the implementation because first of all it will be unfair, unfair for those who travel the north and south Luzon expressway. Especially the public transport drivers. We all know that they get their income through driving. If a driver travel the NLEX or SLEX a day, imagine how much he will pay for vat in a month. Second is, we’re having doubt if the tax collected will go to their respective purposes. If the tax that will be collected will be the cause for corruption, we rather say no to vat implemented on toll fees. We think it is bad enough that the Philippine government has been ceding to the private sector the operation of vital public services such as major highways, turning its operation into a business instead of a public service.

On the other hand, we’re going to agree to it if their real purpose on implementing the tax is to build and improve the public roads and highways in expressways. Because it will be a great benefit for all of us for it will be easier and safer for us to travel. It is such a convenience to us.

We think they should clearly state, where they’re really going to use the collections.

In a positive way, our government is searching for solutions to the problems that our country is facing off.  We’re hoping that this VAT collection to toll will increase the revenue of Philippine government and will not increase the income of our government officials.

We don’t know the effects of implantation of tax on toll fees but if this will help us to promote and improve our country, it’s our duty to follow the law and help the government to introduce the new Philippines to the world.

Economic Growth Theories & their application in the RP setting.

Macroeconomics is a branch of economics that examines the economy as a whole and answers questions such as 'What causes the economy to grow over time?', 'What causes short-run fluctuations in the economy?' 'What influences the values various economic indicators and how do those indicators affect economic performance? 

There are some theories and models that are used as guidelines in measuring the growth of a country’s economy.

One of these is the EXOGENOUS GROWTH MODEL (NEO-CLASSICAL MODEL).

The Exogenous growth model was an extension to the Harrod-Domar model which included the new term, "productivity growth". The most important contributor to this model, Robert Solow; in 1956 developed a relatively simple growth model which fit available data on US economic growth with some success.

Solow extended the Harrod-Domar model by:

     ·          Adding labor as a production factor;

·          Requiring diminishing returns to labor and capital separately, and constant     returns to scale for both factors combined;

·         Introducing a time-varying technology variable distinct from capital and labor.

The capital-output and capital-labor ratios are not fixed as they are in the Harrod-Domar model. These refinements allowed increasing capital intensity to be distinguished from technological progress.

The key assumption of this model is that capital is subjected to diminishing returns. Given a fixed stock of labor, the impact on output of the last unit of capital accumulated will always be less than the one before. Assuming for simplicity no technological progress or labor force growth, diminishing returns implies that at some point the amount of new capital produced is only just enough to make up for the amount of existing capital lost due to depreciation. At this point, because of the assumptions of no technological progress or labor force growth, the economy ceases to grow.

Assuming non-zero rates of labor growth complicates matters somewhat, but the basic logic still applies- in the short-run the rate of growth slows as diminishing returns take effect and the economy converges to a constant "steady-state" rate of growth.

Including non-zero technological progress is very similar to the assumption of non-zero workforce growth, in terms of "effective labor": a new steady state is reached with constant output per worker-hour required for a unit of output. However, in this case, per-capita output is growing at the rate of technological progress in the "steady-state".

The application of this theory in the RP setting is that we all know that technology is widely used even in our country. The application of this theory is that it uses the technology as the foundation of production. We all know that technology improves as time goes by which makes this more effective. Since the foundation of production of capital is technology, the production capital increases as technology improves. It is believed that as long as we have the similar characteristics as the rich countries, and implying this model will help us catch up with other countries such as USA or Japan. There is a high possibility that our country will increase if we start using this theory.

Another is the The Classical Theory of Employment  (Theory of John Maynard Keynes) -KEYNESIAN THEORY

According to Keynes, most treatises on the theory of value and production are primarily concerned with the distribution of a given volume of employed resources between different uses and with the conditions which, assuming the employment of this quantity of resources, determine their relative rewards and the relative values of their products.

The classical theory of employment — supposedly simple and obvious — has been based. I think, on two fundamental postulates, though practically without discussion, namely:

1. 1.    The wage is equal to the marginal product labor
2. 2.    The utility of the wage when a given volume of labor is employed is equal to the marginal disutility of that amount of employment

This means that the wage of an employed person is equal to the value which would be lost if employment were to be reduced by one unit. And, the real wage of an employed person is that which is just sufficient to induce the volume of labor actually employed to be forthcoming. Disutility must be here understood to cover every kind of reason which might lead a man, or a body of men, to withhold their labor rather than accept a wage which had to them a utility below a certain minimum.

Four possible means of increasing employment:

• An improvement in organization or in foresight which diminishes ‘frictional’ unemployment;
• A decrease in the marginal disutility of labor, as expressed by the real wage for which. Additional labor is available, so as to diminish ‘voluntary’ unemployment;
• An increase in the marginal physical productivity of labor in the wage-goods industries
• An increase in the price of non-wage-goods compared with, the price of wage-goods, associated with a shift in the expenditure of non-wage-earners from wage-goods to non-wage-goods.

 Application of this theory in the RP setting: As we all know, Philippines, our country is known for having low employment rate. This is one of the reasons why our economy is not good. There are many Filipinos looking for stable jobs. But, now a day’s most of the graduate students are unemployed because the government and private sectors failed to institute meaningful measures to correct the mismatch between skills and job. Another is, some Filipinos are willing to work abroad to have high wages. In our country the salary of an individual is not worth to the service he/she is giving. With that, others leave this country to have a good salary. I think Philippine economy should work on a theory to help unemployed individual. The above theory is an example to have a good employment rate in a country. Its focus is on the corresponding wages of an employed citizen.

Another one is the Classical Growth Theory

The modern conception of economic growth began with the critique of Mercantilism, especially by the physiocrats and with the Scottish Enlightenment thinkers such as David Hume and Adam Smith, and the foundation of the discipline of modern political economy. The theory of the physiocrats was that productive capacity, itself, allowed for growth and the improving and increasing capital to allow that capacity was "the wealth of nations". Whereas they stressed the importance of agriculture and saw urban industry as "sterile", Smith extended the notion that manufacturing was central to the entire economy.

David Ricardo argued that trade was a benefit to a country, because if one could buy a good more cheaply from abroad, it meant that there was more profitable work to be done here. This theory of "comparative advantage" would be the central basis for arguments in favor of free trade as an essential component of growth. 

Classical growth theory may also apply in present whereas they stressed the importance of agriculture which is true, and also one of the main sources of livelihood in our country. Although this theory see the urban industry as sterile, I somewhat disagree like David Ricardo because even in past and present time we Filipino’s already perform trading, which connect us to other countries and build a good relation to other neighboring countries.

Lastly, Fine-Tuning Theory by Walter Heller

Fine tuning is attributed to American economist Walter Heller (1915-1987), and is used to refer to short-run interventionist approach to the economy using monetary and fiscal policies to control fluctuations in demand.

It says here that the government has a role and should have to do something in regulating inflation and unemployment.

It involved altering fiscal policy continually to stabilize national income as close to its full-employment potential as possible.

The application of this theory in the RP setting will be a big help in our economy. They should give importance to this, especially today that we're experiencing a kinda high rate of unemployment. The government should monitor and balance the inflation in our economy because some people are taking advantage on this, like adding too much price on such things. Unemployment should also be monitored for us to have a good economy and to help those people who don’t have work. There should be a balance between the inflation and the unemployment.

There are a lot of theories to be considered in improving our economy. And we think that it’s not a waste of time to try and there’s even no harm in trying just for us to have stable economy for our country. 

We know, we all hope for the betterment of our economy. And we won’t stop hoping..and hoping..and hoping for that.

                                                          

                              GDP vs GNP

 Gross National Product (GNP)

The GNP is defined as the total value of

income earned by residents of a country regardless of where the

income came from.

Gross Domestic Product (GDP)

The GDP  is the total value of production realized by

 resident producers in an economic territory.

In the broad sense :

GDP is " GAWA sa PILIPINAS  "and for GNP is " GAWA ng mga PILIPINO "

             " Gross Domestic Product , Net Factor Income from Abroad and 
                                              Gross National Product"
                                           1st Qtr 2000 - 4th Qtr 2010
                                                     ( in million PhP) 

*At Current Prices

            

         2009     2010

a.) GROSS DOMESTIC PRODUCT             7,678,917            8,513,037

b.) GROSS NATIONAL  PRODUCT             8,809,984            9,750,193 

c.) NET FACTOR INCOME FROM               1,131,067            1,237,157
                  ABROAD

> Understanding the Gross Domestic Product (GDP) and Gross National Product (GNP) is important as a citizen. Knowing it makes us an informed citizen. You will know the products coming in and out in the country.

The reasons why GNP is always HIGHER than GDP. . . .

* One of the reason is that our fellow Filipino Citizen goes to abroad to work their, We called them OFWs (Overseas Filipino Workers) which causes the GNP to OVERPOWER the GDP. It also include that most of our country men loves imported goods rather than our local goods, we love imported products because their HIGH CLASS QUALITY not like those local product we had here, this is the initial thinking of our fellow Filipinos today, that is why we seldom buy local good from our county and these also are the main reasons why our GNP is always higher than our GDP.

“This is the United States of America. No matter what some agency says, we will always be a triple A country.” -Barack Obama

But based on the news – NET 25 the United States of America drops from triple A (AAA) to double A plus (AA+).

WHAT HAPPENED?

For the whole week, US Economic Crisis has been the talk of the town. Being the “center of the world”, everyone’s attention is all in US.

• The U.S. economy is currently experiencing its worst crisis since the Great Depression. The crisis started in the home mortgage market, especially the market for so-called “subprime” mortgages and is now spreading beyond subprime to prime mortgages, commercial real estate, corporate junk bonds, and other forms of debt. Subprime mortgage is when the people are having a hard time repaying for their debt.Because of this, it causes the US banks to lose a 1/3 of their total bank capital. 

• The US also suffers from high unemployment rate and high inflation. The workers are having a hard time, because some company tends to squeeze their existing work force to produce more, making the workers work overtime with low wages. Up to now, the government is implementing a lot of ways to solve the problem, but still the crisis remains. The crisis has led to a sharp reduction in bank lending, which in turn is causing a severe recession in the U.S. economy.

How will you react on this?

Maybe youngsters would probably say "I don't know and I dont' care" and adults would say "OMG! Why did this happen? or "How can this be happen to USA?". The difference is most of the kids of our age wouldn't even try asking or be curious about the current state of US. We should at least involve ourselves into this problem. We should learn the importance of this matter even at our young age. Among adults, shall we say they worry too much because they have their loved ones working in US.

What are the effects of the said dropped down economy to 

our country?

We all know that Philippines and USA has a good relationship. So, we should expect a great effect of this to our country. It is reported that the United States can no longer pay its debts. 

• The effect of this to our country is that we can no longer lend funds for our government. We will have weaker remittances, lower exports, and more problematic investments. As of now, the USD is decreasing vs. the PHP. The financial market is trembling down and Asian markets are starting to fall. It is also a big impact to all Overseas Filipino Workers (OFW) in the USA who are delaying the money they are sending due to lower rate of foreign exchange. Finally, the greatest effect that this could bring to our country is high rate of unemployment and the lack of productive domestic investment opportunities. As we all know, most of the countries depend on the economy of USA.

What may be the cause of the dropping down of the US Economy?

• It’s the increasing balance of debts of US.
• Also the so much use of credit cards. They always use credit cards on their everyday expense, they are not use to use bill or on cash.
• Increase of the stock market and the arguments of the Democrats and the Republicans.
• It is also mentioned about currency wars.
• Always and easily lending a loan to anyone not merely anyone, but to needy ones, like to those who are just only starting putting up a business and then suddenly they’ll just find themselves not successful, that’s why their obligation on those entities will be the one who will take risk. Because in the USA if you have a credit to them or you have a loan on payment that mean so much to them, it means that they trust you so much and unfortunately the American does.

US government must solve this problem. They should stand as one and rebuild the economy of US. They must keep in mind that the failure of US economy may also lead to the failure of the economy of other countries. (again) As we all know, most of the countries depend on the economy of USA.

"PNoy's 2nd SONA"

July 25, 2011 

Second State of the Nation Address 

Unfortunately, we, students didn’t have a chance to watch the SONA of our dear president. In our opinion, classes should be suspended because it’s important for us to know what PNoy’s says in his SONA but PNoy didn’t declare any announcement for the cancellation of classes and no work at that date. For us it’s like… “parang sinabi niya na rin nawalang kwenta pakinggan ang kanyang SONA at ang lahat ng kanyang pinagsabisabi” because he doesn’t want anyone to know what will he gonna say.

The State of the Nation Address of President Benigno Aquino III was delivered at the joint session of the Congress of the Philippines on July 26, 2011. The speech can be summarized into two parts. The first part enumerates the problems and alleged anomalies of the past administration. This contributes why PNoy feels that he is facing dilemma to deliver his promises. The second part includes the solutions to the problems that the nation is facing right now. He stated strategies he wants to adopt to solve some issues in order to promote peace for the nation. PNoy explained the kind of government he wants to have.

We all have different reactions or feedback on PNoy’s SONA. Some are satisfied. Some are not. Others give importance, while the others just don’t care.

 Let me share some of what we have noticed and some of our evaluation on his 2^nd SONA:

[x] First thing that we noticed was the language he used. Unlike the past presidents, Pnoy delivered his speech in FILIPINO LANGUAGE so that Filipinos will understand his statement clearly and precisely. We are impressed to our president for using our own language in delivering his speech.

[x] He also stated all of his achievements and future plans for the Philippines.

[x] First topic he discussed was the wang-wang thing. It is very obvious to us that this is a mission accomplish for our president. PNoy used the word wang-wang consistently. He used it to mean “abuse of power”.  

“Narito po ang halimbawa ng resulta ng ating kampanya kontra wang-wang sa sistema. Nitong taong ito, taumbayan na mismo ang nagsabi, nabawasan ang nagugutom sa kanila. Mula 20.5% na self-rated hunger noong Marso, bumaba na ito sa 15.1% nitong Hunyo, katumbas ng isang milyong pamilyang Pilipinong nagugutom dati, pero ngayon ay nakakakain na nang tama kada araw.”

[x] It is also discussed about the taxes paid by Filipinos. We now can see where the taxes were going. We now have funds for our needs.

Pinoy’s also campaigning for paying the right amount of tax; he also said “hindi lang po gobyerno, kundi kapwa natin Pilipino ang pinagkakaitan sa hindi pagbabayad ng tamang buwis”.

[x] Next is the Spratly Island. Yes, it is ours and he, his excellence, promised he will defend our country’s territory and sovereignty. 

[x] We are also impressed that he didn’t mention anything about Hacienda Luisita. It is a great decision not to include it since it is owned by the Cojuangcos and not by Philippines. Any decisions and problems that deals with Hacienda Luisita must be solved privately by the respective owners.

[x] PNoy also mentioned about the Filipino characteristic of “culture of negativism” and “crab mentality”. We don’t think that us Filipinos can change these characteristics since it is already in our nature.

“Let us stop pulling our fellow man down. Let us put an end to our crab mentality. Let us make the effort to recognize the good that is being done.” 

“Let us end the culture of negativism; let us uplift our fellow Filipinos at every opportunity.” 

“If you see something right, do not think twice—praise it.”

[x] We also noticed that most of the topics discussed in his first state of the nation were not included in the second one.

There is one thing that we like about PNoy, he’s try to eliminate all corrupt government official in our country. He always focus on that problem because what’s the sense of improving if there always the hindrance to our success. This hindrance is, the number 1 public enemy of the country , CORRUPT people on the country.

We hope that his administration will succeed in their plans so that our nation will be free from any corruption.

• And what are his new promises now?

It is more likely to fulfill his first promises during the first sona because the people are waiting for improvement and not for promises.

 Let’s give him more chance to prove himself to us, to prove to us his commitment to our country.

Still, President Aquino still has a long way to go. There are ups and downs that he might face during his journey but he has to be strong for our country and for the people.

“KAYO ANG BOSS KO”

-PNoy

For those who missed the President’s SONA, you may watch it below  (click the link)

Speech SONA 2011 via Livestream

"Evaluation on Economic Programs of President Noynoy Aquino in His First Year Term"

 

President Benigno "Noynoy" Aquino III has passed a year in his presidency. June 30 2011, the date wherein President Benigno Aquino III, son of the former President Corazon Aquino and Benigno Aquino,Jr., became the fifteenth president of the Republic of the Philippines.
Many have anticipated his first year in the position. Many have anticipated what will his future plans and projects are. One of those is his Economic Projects. During the presidential campaign, he said his plans were more jobs for Filipino workers, larger budget for poverty alleviation project, expansion of PhilHealth program, the reassessment of BIR’s tax rulings process, the Zero Based Budgeting and more. Do you think he will be able to accomplish his plans before his term end in 2016?

• In his speech, he said that his administration have done fairly well in their first year. He also added that in the coming years, he is expecting that all members of government, with the help of the Filipino people, to work together even more and hasten the realization of the change for which his administration aspires.

• In his 1st year as president, the economic model being followed by Aquino today is not different from the model followed by almost his predecessors. Instead of adopting long term solutions to the problems in economy, the Aquino government has adopted foreign dependent framework.  
  
  

• During his first year, we noticed that most of his plans were not yet started.. We still count some of his plans successful like the very famous “Walang Wang-Wang”. We notice that there is no much news about his economic plans. Nowadays the “Zero Based Budgeting” is starting to boost. Zero Based Budgeting is like everything starts in zero base and every function of the organization is analyzed. Maybe this is the start of PNoy’s plan for our country. We think this is a good project because every position is analyzed and the budget for a specific need will not be wasted.
  
  
  
  
• Aquino's administration is much focus on eliminating corruption. For that most of the people argue Mr. President because they say he is not doing all his promises to the people, because it is not obvious like what we say president Noynoy focus on defeating the corruption on our country. We admire President Noynoy for being so honest and for being such a model for those future coming president to our country because he is the person who hate corruption, because corruption kills our economy. We can’t literally judge PNoy that he don’t care about our economy because he just still adjusting and it’s just his first year as president. 

• For us his administration is first solving all the problems that the last administration left that's why his progress is slow because of that hindrances from the last administration problems, because for him the development of our country depends on eliminating all the black sheep of the administration. The corrupt people are the first obligation of PNoy to eliminate them, so that he will be easy for him to raise the country from poverty, and his program will be accomplished. Our country is slowly rising because of his hard work.

We can’t say much because one year is too short to judge our president. He still has 5 more years to improve our economy and our country.

IMPORTANCE OF ECONOMICS IN BUSINESS EDUCATION

Why most colleges and universities require students to complete at least one course in economics?  Because economics touches most areas of life, making it an important as a subject matter to study.

First, let us discuss what economics is. Economics is the study how individuals and societies choose to use scarce resources that nature and previous generation have provided. It is also said that economics is the study of human behavior. Economics is about how an individual make a choice with limited resources to satisfy its needs.

Why do we need to study economics? There are four reasons to study economics: 

1. to learn a way of thinking
2. to understand society
3. to understand global affairs
4. to be an informed citizen.

How do the four related? To learn a way of thinking, one must learn the three fundamental concepts which are Opportunity Cost, Marginalism and Efficient Market. One must learn the concept of making the good choice to be able to understand the society. The past economic status affects the current status of our economy and influence the future status. By learning the stability of our own society, we are now ready to understand global affairs which include international events and economic consequences. By understanding the first three concepts, we can now attain the level of an informed citizen.

How is it related to BUSINESS education?

Economics and Business is like a pair of lovebirds. If one of them dies, the other one will eventually die, too. It’s like if there is no economy, how will the business operate or in the other hand, what is the sense of economy if there is no business. How will the business operate if we don’t know the demand and the needs of the public?

Economics plays a very important role in Business Education. We can’t make a reasonable decision to ensure the stability and the continuous operation of our business in the future. By studying economics, we will learn to make economic decisions to influence the investors and creditors of a business. On the other hand, the main purpose of business education, such as accounting, is to provide information that is intended to be useful in making economic decisions. So, I can say that business depends on economy and economy depends on business. The business needs the economy to know what the necessities of the users are. Also to know what are the products demanded by the public and how many supplies of these products to produce. If there is no business, then there will be no economics. Since economics is the study of making decisions with limited resources, how will you make decisions if you don’t have any resources? It’s like solving a puzzle without the puzzle pieces. We won’t be able to know if the supply produce is enough to satisfy the demand of the public and we won’t be able to tell what the needs of the users are.

These two are both important and cannot be parted from each other.

IMPORTANCE:

• ·         It prepares you to be a more knowledgeable and informed participant in the modern economy.
• ·         It gives our students the building blocks for a successful financial future. It empowers consumers by giving them the knowledge and tools to improve their economic well being. It is the best investment we can make.
• ·     It teaches students the value of money. Economics help us in making decisions relevant in our daily life as a student.
• ·         It can make you a smarter consumer, worker and investor.
• ·         It helps in framing a business, policy and making effective decision related in business education.
• ·         It also solves operational and management problem.
• ·         Its helps in improving the efficiency of workers through different incentives such as increasing wage rates, improving working conditions and providing other facilities.
• ·         It helps us to improve our way of thinking especially the students taking up a business course about making real and personal decisions that they can apply in their future work.
• ·         Helps young people understand the workings of the economy and the financial system in which they are just beginning to participate.
• ·         By the study of economics businessmen learn the procedures and practices followed in trade and commerce. They get information about banking, monetary policy of government which helps them to organize and adjust their business activities and increase the margin of profit and improve the quality of his goods and services.
• ·         It enables us to understand the working process of the economic system and analyzing its issues. Its study guides them to make such economic policies through which distribution of national wealth can be distributed equally among all the members of the society.
• ·         It helps us in determining the economic standard of the country which will help you on deciding if you will risk on putting up a business.
• ·         Even if you are just a consumer it is necessary to know about economics because you will know if your money is worth it in buying those products.
• ·         It is also applicable for those who are just starting to build up their own business if their future business will be marketable on the industry.
• ·         To know how to formulate an understanding of the effects of financial actions.
• ·         To help our society to decide on how to use our limited resources.
• ·         To be aware and understand of the things that is happening in our society.
• ·         Help us in making decisions relevant in our daily life.
• ·         It allows us to be an informed citizen, so that we can determine if the policy of the government is good or bad.
• ·         It helps students/people develop the skills to meet their financial and personal objectives, including savings, financial stability, home ownership, higher education, or retirement.
• ·         It gives people the tools to understand economic and financial issues and to interpret events that will affect their financial futures.
• ·         Informed, well-educated consumers make better decisions, increasing their economic security and well being. These consumers are better able to contribute to vital, thriving communities, further fostering economic development. Improved economic education will result in more productive, fulfilling lives for individuals and families — and, in turn, more vibrant, economically stable neighborhoods and communities.
• ·         Most important, economic education is critical to building bridges between educators, businesses, and consumers. These bridges will prepare our society to meet the challenges of an increasingly knowledge-based economy. As we work to increase familiarity with new technological and financial tools, we give people the resources necessary to secure individual economic success.

Basically on our point of view, the importance of economic on business education is, it will serve as your guiding way or simply this will help you on your DECISION MAKING.