applied econ Pre final part 2

• TRAIN Law


  Tax Reform for Acceleration and Inclusion or Republic Act No. 10963
• Minimum wage


  Minimum amount of compensation that an employer is required to pay its worker
• Minimum wage setting


  Can be fixed by law, regulation of a responsible body, wage commission, salary committee, industrial or labor court, or tribunal
• Purpose of minimum wage

  Intended to protect employees from small wages
• Employers from the private sector (including non-profit org) are urged to grant monthly emergency allowances, COLA (Cost Of Living Allowances), lower the tax rate for domestic corps.


  Presidential Decree No. 390
• Wage Rationalization Act, aims to support minimum wages and encourage productivity improvement, rights to fair share


  Republic Act No. 6727
• Minimum wages in the PH per region

  • Two-Tiered Pay Structured - one group of workers receive lower wages and benefits than another
  • Wage Rationalization Act (RA 6727) - there should be diff. , minimum wage rates per region for agri&non-agri workers
• Problems in different minimum wage rates

  • Migration to Urban Areas - pag mataas ung minimum wage sa urban areas marami naghahanap ng job, crowding sa urban areas sa dami ng tao
  • Fewer Businesses in other Regions - pag mataas minimum wage attracted mga job seekers pati business owners, mas gusto ng big businesses na nasa big city sila kesa sa regional municipalities kasi mas mataas benta
• Taxes


  Compulsory charges by government to fund diff. operations, charges on individuals, companies, and goods consumed, anybody who fails to pay mandated taxes is held accountable
• Types of taxes

  • Documentary Stamp Tax
  • Donor's Tax
  • Estate Tax
  • Income Tax
  • Percentage Tax
  • Value-Added Tax (VAT)
• Excise Tax


  Collected from goods that are harmful to people's health and environment/business (alcohol beverage, tobacco, luxury goods, automobile, oil, mineral, and petroleum)
• Comprehensive Tax Reform Program (TRAIN Law)


  RA 10963, faster, fairer, and more effective taxation system, seeks to increase revenues to support gov's programs and finance investments
• Benefits of TRAIN Law

  • Education - aims to create a more conducive learning that will implement teacher-to-student ratio
  • Healthcare Services - aims to build 60,483 rural health units, 484,326 barangay health stations, or 1,324 provincial hopitals
  • Infrastructure Programs - major highways, expressways, flood control projects in the next 5 years
• Concerns under the TRAIN Law

  • Social Security System (SSS) - caters to private, professional, and informal sectors
  • Government Service Insurance System (GSIS) - caters public sector — gov't employees and uniformed personnel
  • PhilHealth - seeks to provide universal health care in the PH
  • Pag-IBIG - provides affordable housing and loan schemes for Filipinos
• Impact of business on the government

  Businesses are expected to abide by the rules, contribute to the provision of public services through taxes
• Income taxes


  Majority of the businesses fall under MSMe, sole proprietorships or partnerships and are expected to contribute to the govt's budget through taxes, self-employed individuals have the option to pay 8% of their total gross sales exceeding P250k
• Corporate taxes


  30% of a corporation's net taxable income
• Taxes paid by firms

  Used to fund projects of the government aimed at poverty reduction
• Impact of business on household

  • Employment opportunities - laborers ensure that households receive a steady flow of income, long-term career growth means that there is a potential for people to improve their standards of living
  • Provision of goods and services - businesses provide goods/services that households consume on a regular basis
• Business sectors

  • Primary Sectors - produce/extract raw materials
  • Secondary Sectors - transform raw materials from the primary sectors into finished products w/ the help of machinery/factories
  • Tertiary Sectors - provide goods or services to individuals and businesses
• Chain of production


  A process that goods or services go through to be delivered to the consumer, value is added to the raw materials (primary) through various stages of production until its finished (secondary and tertiary)
• Interdependence of the 3 sectors


  Primary (raw materials) >>> secondary (finished goods) >>> tertiary (deliver/provde goods/services)
• Tariffs


  Taxes imposed upon foreign goods