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Sep 23

What the??

On a purchase of books costing Php 216.50 and shipped by the bookseller to Manila, the Post Office, upon receipt, then issued the following:

Tentative Assesment Sheet

Customs Duty 49.01 Tariff Heading

$396.95 x 46.66 Exchange Rate

Php 18,522 Dutiable Value in peso x 5% Rate of Duty

Php 926 Total Customs Duty

Value Added Tax

Php 18,522 Dutiable Value in peso

Php 926 Customs Duty

Php 250 Customs Documentary Stamp

Php 250 Import Processing Fee

Php 15 BIR Documentary Stamp

___________________________

Php 19,963 Total Taxable Cost x 12% EVAT Rate

___________________________

Php 2,400 Total Payable VAT

XXXXXXXXXXXXXXXXXXXXXXX

SUMMARY

Customs Duty: Php 926

VAT: Php 2,400

IPF: Php 250

Customs Stamp: Php 250

BIR Stamp: Php 15

__________________________

TOTAL Php 3,841.00

Now I have no problem with paying appropriate taxes but are these the proper taxes, in the right amounts? Books are non-VATable items, I thought (see The Unlawyer and despite House proposals to impose VAt on books; and even this). So what gives? This has long been a sore point among purchasers of books and no one seems to be able to give a definitive answer!

__________________________
Update 9/30/08

The relevant legislation appears to be as follows:

1. Republic Act 9337, amending Section 109 of the National Internal Revenue Code, the importation of books and any newspapers, magazines or journals are exempt from value-added tax. To wit:

“Section 109. Exempt Transactions. — Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from value-added tax:
xxx
(R) Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements;”

2. Tariff and Customs Code of the Philippines, Section 105:

“Section 105. Conditionally Free Importations. —
xxx
s. Philosophical, historical, economic, scientific, technical and vocational books specially imported for the bona fide use and by the order of any society or institution, incorporated or established solely for the philosophical, educational, scientific, charitable and literary purposes, or for the encouragement of the fine arts, or for the bona fide use of and by the order of any institution of learning in the Philippines: Provided that the provisions of this subsection shall apply to books not exceeding two (2) copies of any one work when imported by any individual for his own use, and not for barter, sale or hire.;”

3. Republic Act No. 8047, otherwise known as the Book Publishing Industry Development Act:

“Section 12. Incentives for Book Development. —
xxx
In the case of tax and duty-free importation of books or raw materials to be used in book publishing, the Board and its duly authorized representatives shall strictly monitor the quality and volume of imported books and materials as well as their distribution and the utilization of the said imported materials.

Books, magazines, periodicals, newspapers, including book publishing and printing, as well as its distribution and circulation, shall be exempt from the coverage of the expanded value added tax law.”

The opinion of the BIR is that that the importation of books for personal use is exempt from value added tax as well as from the payment of import duties. The Post Office was informed accordingly and you may want to inform the Post Office of these provisions if you face a similar problem. A small handling fee, is, however, legitimate on the part of the Post Office.

106 comments

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  1. BrianB

    Anyone has any thoughts on Villar? is he out?

  2. hvrds

    “Highly unlikely. The $85bn revolving credit facility will enable the company to ride out its liquidity problem. The AIG brand will still be there.”

    AIG brand is one thing but the insurance holding corporation is another…NY state lawmakers are already crafting legislation to require insurance companies to install reserves for CDO’s.

    The CDO’s that AIG issued all had trigger clauses based on the equity postion of AIG. Hence the need to constantly raise funds . As long as the underlying asset continues to lose value the CDO’s will require addtional equity to be infused.

    Hence the Federal government would like to utilize a one shot shock and awe to the markets to attempt to stablize the irrational depression that is leading to market collapse. Irrational exhuberance led to the bubble but that is now reversing simply because the underlying asset values continue to deflate.

    There is an old saying by Keynes, markets may remain irrational longer that you may remain solvent.

    Hence the illiquidity probelm which is very fluid now heading downward which will result eventually in insolvency. The Fed and the treasury are desperately trying to command the psychological tidal wave to turn completely around.

    The basic problem remains -what is the price of these CDO’s which is tied to many other derivatives.

    Bernanke said it very succinctly. The government would like to pay a better price for these CDO’s to recapitalize the valuations on banks books. The markets then probably would react to that price floor to be set by the government. That means banks who have these instruments on their books will have to price these assets to the price set by the govenrment purchase of these instruments.

    That is the biggest known unknown of this entire exercise.

    http://www.newsweek.com/id/160780?GT1=43002

    “Love it or hate it, the true cost of Treasury Secretary Hank Paulson’s proposed rescue of the financial system is not the sticker price of $700 billion. Conceivably, the government could make money; with glum assumptions, the losses would probably be less than $250 billion. No one knows the correct answer — not Paulson, not Federal Reserve Chairman Ben Bernanke nor anyone else — but here’s how to think about the problem.”

    “Under Paulson’s proposal, the Treasury could buy distressed mortgage-backed securities. Consider a batch of hypothetical securities originally worth $100 million and paying an interest rate of 6 percent. They’re no longer worth $100 million because half of the homeowners have stopped making their monthly payments. Suppose, then, that the government buys the mortgages for $50 million. It earns 6 percent on its $50 million, and if it borrowed money at 4 percent to buy the securities, it would make a tidy profit. If the government holds the securities until maturity and all the remaining homeowners repay their mortgages, the government would come out ahead.”

    “Would something like this happen? It could, and Pimco’s Bill Gross argued in the Washington Post that it might, but there are several reasons it might not.”Robert Samuelson

    Also please note here in the Philippines non-life insurance products are very weakly regulated by the Insurance Commission. The case of auto insurance liability polcies and bonds sold by companies for deffered customs duties. Most of these companies do not have adequate equity for the policies they issue. They in fact sell these to reinsurance companies which is an even bigger scam.

    Why do you think the time element is so critical in getting a mechanism in place to set a price for these instruments??? This is a form of price control mechanism being imposed by the state.

  3. hvrds

    Taxes are forced confiscation of private property.
    SSS/GSIS,Pag-Ibig, Philhealth are called entitlement taxes. They are managed by the state. They are called conrtributions but they are impositions by state fiat.

    You have excise taxes, stamp taxes, duties, consumption tax,income tax and payroll tax or entitlement taxes estate tax,capital gains tax etc.

    Even the coconut levy was a tax.

  4. hvrds

    A perfect example of a CDO being sold and bought by BDO and Mega World.

    BDO in turn will sell that to a third party …

    http://www.abs-cbnnews.com/business/09/25/08/megaworld-bdo-sign-p5-b-financing-deal

    Megaworld, BDO sign P5-B financing deal

    ——————————————————————————–

    abs-cbnNEWS.com | 09/25/2008 4:17 PM

    “Megaworld Corp. told the local bourse on Thursday it has signed a P5-billion financing deal with Banco de Oro Unibank Inc. (BDO) that will allow it to sell receivables from previous property sales and provide easy credit for its new buyers”

  5. leytenian

    Analyzing the problem at the bottom, homeowners should be allowed to refinance their loans at current market value. Here’s an article why I will answer yes to this question:
    Should Congress fund a homeowners’ refinance program after the bailout?

    “while lawmakers (and no doubt taxpayers) do not want to reward housing speculators, there’s a large pool of borrowers who will be able to pay their mortgages if they can get out of high interest rate notes, and other burdensome adjustable rate mortgages, and refinance at a low, 30-year fixed rate.

    But one argues that:

    Under the free market, winners are rewarded and losers are punished — a mechanism that reinforces individual financial discipline and encourages citizens to make wise and correct choices. It also leads to a fitter and stronger society, market absolutists argue, and weeds out the less fit. Quite literally, it’s economic and social Darwinism, a survival-of-the-fittest contest that leads to a stronger society.”

    Housing Sector / Economic Analysis: Keeping more homeowners in their homes would not only be a step in the right direction concerning home prices, it would also stimulate the U.S. economy. That’s because citizens who own homes don’t just live in them; they buy furniture, appliances and undertake maintenance — all spin-off sectors that would also benefit from fewer foreclosures. Hence, in the final analysis, the view from here argues that the benefits of home ownership expansion far outweigh its costs.”

    http://www.bloggingstocks.com/2008/09/24/should-congress-fund-a-homeowners-refinance-program-after-the-b/

  6. leytenian

    “Megaworld Corp. told the local bourse on Thursday it has signed a P5-billion financing deal with Banco de Oro Unibank Inc. (BDO) that will allow it to sell receivables from previous property sales and provide easy credit for its new buyers””

    the question would be, who will be the new buyers? consumer confidence continue to fall at its lowest level. what about the rising unemployment? How does a real estate business advertise and market it’s Philippine housing products to OF, OFW’s if those OFW’s confidence in the market have also fell? Is the down payment affordable and rent will cover the costs? If new buyers will enter the market , how are they going to sustain to pay if stability of income is unknown. If new investors will enter the market, how can it sustain if ROI is negative due to rental average is below normal rate due to unemployment? Real estate may not be a good investment in the Philippines for now. It’s economy relies on mother america.

    On the positive side, friends from Philippines are emailing me that their nieces and nephews are now being interviewed at the embassy for Visa approval ( majority are nurses and therapists)… hmmnnn.. sounds good to me.

  7. leytenian

    To Manolo on Books:

    Only a suggestion: Create a non profit entity. Register thru SEC with two other members. A goal and Mission must be clear and full disclosure of intentions must be included in your request of incorporation.

    This is the only way that books donated to your entity are exempt to whatever tax you paid. Who knows you might be able to attract many donators who need an honest person like you to distribute their donated books around the Philippines. Just a suggestion. Of course , after reading the books, it will not be for sale unless the proceeds are donated to another non profit entity or a public library. I know you are so busy but with your networks , this will be an easy delagation of task to others. Just in case, you like this idea for humanitarian purposes, please blog new project here and hopefully, everyone will input their ideas.

    sincerely

  8. hvrds

    “Analyzing the problem at the bottom, homeowners should be allowed to refinance their loans at current market value. Here’s an article why I will answer yes to this question:” Once again another prime example of illiteracy…

    There is no such thing as fair market value in a marketplace that is deflating……There are almost no buyers and so so so many sellers….

    God help the stupid…

  9. Jose

    Nabanggit na din lamang ang PhilPost, I was kindda ashamed because while I was dropping a mail at the United States Postal Service I overheard of the clerks there discouraging one person to send an “insured” package “to the Philippines”. An insurance is an indemnity for a possible loss. However, the probability of such event is slim somehow. Pero nung narinig ko yung clerk, naiisip ko na ang loss of package sa Pinas is not a possibility but a reality.

  10. nash

    “Anyone has any thoughts on Villar? is he out?”

    Out? I thought he was inserting.

  11. leytenian

    hvrds,

    Should Congress fund a homeowners’ refinance program after the bailout?

    you mean to say that the economist is stupid for writing the article leaning favor towards the homeowners to refinance?
    and you are always correct.? 🙂
    I thought you don’t like the rich to make money from the bail-out?

    Name Calling is a sign of insecurity.

  12. leytenian

    Hillary had a very good proposal in 2007 on home crisis. This will also explain that HVRDS is not always right.

    Hillary’s proposal helping the home owners to avoid foreclosures. Dec 2007.

    “Hillary will challenge lenders and financial institutions to take three immediate steps today: 1) Voluntarily support a moratorium of at least 90 days on home foreclosures; 2) freeze the fluctuating rates on subprime loans for at least 5 years until they can be converted into fixed rate, affordable loans; 3) Require regular status reports on the progress they’re making in converting unworkable mortgages into loans families can afford so we have real accountability.

    Hillary is proposing a comprehensive work out – not a bail out – that would end the foreclosure crisis. If Wall Street refuses to act, Hillary will propose legislation to tackle the problems in the housing market head on.

    As we see growing economic challenges – from the housing crisis to rising energy costs– it’s clear that we need a leader with Hillary Clinton’s strength and experience to create the change America needs. Hillary has proposed allocating up to $5 billion in immediate assistance to help communities and distressed homeowners weather the foreclosure crisis, and called for $1 billion in emergency energy assistance for families facing skyrocketing heating bills this winter”

    http://www.hillaryclinton.com/news/release/view/?id=4530

    FORECLOSURE MORATORIUM: Hillary will call for a moratorium on home foreclosures of at least 90 days so that a rate freeze can take effect and at-risk homeowners can get financial counseling to help them transition to affordable loans.

    FREEZE ADJUSTABLE RATE LOANS: The rate freeze must last at least 5 years, or until subprime mortgages have been converted into affordable loans. A typical subprime adjustable rate loan is raising monthly payments by 30% to 40% for many families, causing a wave of housing defaults across the country.

    REQUIRE ACCOUNTABILITY: Hillary will ask for regular status reports on the progress Wall Street is making in converting unworkable mortgages into loans families can afford

    http://www.hillaryclinton.com/news/release/view/?id=4530

  13. supremo

    ‘Two sources with knowledge of the situation but not allowed to speak of it publicly said there was a knock on the door and Paulson, who helped devise the administration’s plan, asked to come in.

    Paulson then pleaded with the Democrats not to blow up the deal by criticizing the House Republicans. The Democrats countered that they had been working with Paulson all week amid criticism of the plan from their own party and constituents.

    Paulson repeated his plea that they not do anything that would spook the financial markets Friday morning and genuflected in front of House Speaker Nancy Pelosi, D-Calif.

    “I didn’t know you were Catholic,” the speaker quipped.’\

    The vultures are hovering above. Chase just bought WaMu’s banking operations for less than $2B. That’s cheap. Buffett got into Goldman Sachs for a song. Barclays got an instant US operations overnight. These cheap takeovers will not stop until there is a bailout of the US financial industry.

  14. Carl

    Can you imagine if the same thing happens to the Philippines, and we ask the help of the IMF for a bail out? I’m sure IMF would have told us to stop any further government spending and balance that budget or else f*ck off.

    But that’s exactly the opposite of what the U.S. government is doing to respond to this crisis. The bailouts will increase public debt.

    I’m wondering if Washington realizes their hypocrisy? Hopefully with this crisis the world will realize it.

    I am not against the bail out. It just makes me angry that we’re being used to swallow a bitter pill by the IMF everytime we need them and now that it’s time for them to swallow the same pill, they are now saying that the pill is ineffective.

  15. supremo

    Bailout Philippine style.

    ‘When Aquino assumed the presidency in 1986, P31 billion, slightly more than 25 percent of the government’s budget, was allocated to public sector enterprises–government-owned or government-controlled corporations–in the form of equity infusions, subsidies, and loans. Aquino also found it necessary to write off P130 billion in bad loans granted by the government’s two major financial institutions, the Philippine National Bank and the Development Bank of the Philippines, “to those who held positions of power and conflicting interest under Marcos.” The proliferation of inefficient and unprofitable public sector enterprises and bad loans held by the Philippine National Bank, the Development Bank of the Philippines, and other government entities, was a heavy legacy of the Marcos years.
    Burdened with 296 public sector enterprises, plus 399 other nonperforming assets transferred to the government by the Philippine National Bank and the Development Bank of the Philippines, the Aquino administration established the Asset Privatization Trust in 1986 to dispose of government-owned and government-controlled properties. By early 1991, the Asset Privatization Trust had sold 230 assets with net proceeds of P14.3 billion. Another seventy-four public sector enterprises that were created with direct government investment were put up for sale; fifty-seven enterprises were sold wholly or in part for a total of about P6 billion. The government designated that about 30 percent of the original public sector enterprises be retained and expected to abolish another 20 percent. There was widespread controversy over the fairness of the divestment procedure and its potential to contribute to an even greater concentration of economic power in the hands of a few wealthy families.’

  16. supremo

    Another bailout Philippine style.

    ‘The Special Purpose Vehicle Act of 2002 or R.A. 9182 sets out the legal, regulatory and taxation framework for banks and other financial institutions to sell non-performing and acquired assets. The law aims to help institutions securitize their assets by granting tax incentives to asset management companies or special purpose vehicles.’

  17. Carl

    Anthony Scalia — to be honest I’m not very knowledgeable of the SSS/GSIS charter.

    But I’m very sure that any increase to SSS contributions does not need Congressional approval, because the last time SSS increased contributions which was during the time of Corazon de la Paz, a friend of mine was actually in the committee and I recall they only needed the President’s approval to effect the increase.

    I’m also very sure that MANDATORY pension and health contributions like SSS and Philhealth are forms of taxes. In fact in Canada, the US and the UK they really call a spade a spade: pension tax, health tax, etc.

  18. PSI

    “Another bailout Philippine style. ‘The Special Purpose Vehicle Act of 2002 or R.A. 9182 ”

    The Philippine SPAVs were just replicas of the shell companies established by the U.S. investment banks in Cayman islands, Bahamas, in order to protect their balance sheets after issuing the odious CDOs to cover the sub-prime mortgages.

    And guess who were advising the Department of Finance and Central Bank: JP Morgan Chase, Citibank, UBS and Lehman Brothers.

    Need you doubt?

  19. cvj

    Carl (at 10:34pm), precisely what happened in 1983 under Jobo Fernandez and Cesar Virata. We haven’t completely recovered from that yet.

  20. anthony scalia

    Carl,

    “But I’m very sure that any increase to SSS contributions does not need Congressional approval, because the last time SSS increased contributions which was during the time of Corazon de la Paz, a friend of mine was actually in the committee and I recall they only needed the President’s approval to effect the increase.”

    yes and no

    yes because Congress can always amend the SSS charter

    no because the SSS charter gives the President the authority to effect the increase

    “I’m also very sure that MANDATORY pension and health contributions like SSS and Philhealth are forms of taxes. In fact in Canada, the US and the UK they really call a spade a spade: pension tax, health tax, etc.”

    In the US, Canada and the UK a pension tax is a tax on the pension received by the pensioner, the health tax is probably like a VAT on moneys paid to health care professionals. So yes, a spade is called a spade there

    What is MANDATORY is the contribution to the pension fund (SSS and GSIS) which ultimately will redound to the contributor’s benefit. Put differently, its a form of forced savings, the SSS/GSIS holds in trust for the contributor. A tax does not do that

  21. supremo

    ‘Can you imagine if the same thing happens to the Philippines, and we ask the help of the IMF for a bail out? I’m sure IMF would have told us to stop any further government spending and balance that budget or else f*ck off.’

    There is a difference.

    The US will issue treasury notes to fund the bailout. Still a loan but behind it is the biggest economy at $12 T. The Philippines can also issue treasury notes to fund a similar bailout. But who will buy several billion dollars of treasury notes in one blow if it is backed by a puny $360 B economy? The alternative is to go to the IMF or World Bank and swallow their bitter pill.

  22. cvj

    Yup, in the USA-dominated system, might is right.

  23. supremo

    Even in the Philippines, might is right.

    If Henry Sy issues a bond, people will line up to buy it. If CVJ issues a bond, will someone even show up? Probably not. The best alternative is to go to Banco De Oro and get a loan.

  24. supremo

    ‘What is MANDATORY is the contribution to the pension fund (SSS and GSIS) which ultimately will redound to the contributor’s benefit. Put differently, its a form of forced savings, the SSS/GSIS holds in trust for the contributor. A tax does not do that’

    If this is right then contributions to the two pension funds can be inherited.

  25. supremo

    anthony scalia,

    In the US, a pension tax (Social Security) is NOT a tax on the pension received by the pensioner. The health tax (Medicare) is NOT like a VAT on moneys paid to health care professionals.

    In the US, SS and Medicare are payroll taxes.

    from wiki
    ‘The employer’s and employee’s shares of the Social Security and Medicare taxes are known as the FICA tax’

  26. broker

    The best way in buying books from other country is to pay duties & taxes in favor of the gov’t. Alam naman natin lahat na ginagawa lmang ng ating gobyerno ang lahat ng paraan upang tumaas ang collection ng buwis isang paraan d2 ang pagpapataw ng 12% vat from 10%, sa BIR at ang pagbibigay ng quota sa bawat collection ng bureau of customs sa buong pinas, isa na ang nabangit d2 na post office, ibig ko pong sabihin ay marahil gnagawa lamang ng isang appraiser ang knyang trabaho na patawan ng buwis ang libro, dahil una nasa batas eto, 2nd upang tumaas na rin ang collection nila sa buwis kong saan my quota sila bilang isang collection district, 3rd gampanan ang kanyang trabaho pabor sa interest ng gobyerno ( loyal). Sa kabilang side naman the customs broker shall defend the interest of its client, gagawa ng paraan ang isang broker upang bumaba o maging free ang pagbabayad ng buwis as possible ngunit naayon sa batas. Basahin po ang general rule ng ng TCCP Vol. – Section 101. Imported Articles Subject to Duty. — All articles, when imported from any foreign country into the Philippines, shall be subject to duty upon each importation, even though previously exported from the Philippines, except as otherwise specifically provided for in this Code or in other laws.

    But syempre ang lahat naman ng batas o R.A ay merong IRR at upang ma implement ang isang IRR the DOF / BOC issues CAO, CMO, DO, & president issue proclamation, PD, PO etc.. depende sa pangangailangan o seguredad sa kalakalan at kong anong nararapat ipatupad para sa ikakabuti ng eknomeya.

    So akoy naniwala na yon ay legal at nararapat, at bilang isang mamayan katungkulan natin na magbayan ng tamang buwis at sundin ang batas.

    At huwag kalimotan maliit man o malaki ang binili o binabayaran humingi ng “RESIBO” ng sa gayon ay talagang masulit naman ang ating pagbabayad at hindi mapunta sa ibang bulsa. Salamat PO!!

  27. cvj

    Supremo, that’s true of course, but my personal financial capability was not what i was alluding to when i stated ‘might is right’. What i meant was when the Philippines was in crisis, the IMF-dictated policy prioritized repaying the creditors at the expense of our real economy. Now that the USA is in the same situation, its priorities are different in terms of trying to insulate the real-economy from the banking crisis. That reveals a double standard and shows just how unjust the IMF was back in 1983 in favoring foreign creditors and squeezing our economy.

  28. supremo

    First, The US did not run to the US-controlled IMF for help. The US government will try to solve the banking crisis by issuing treasury note to fund the bailout. Second, the Philippines ran to the US-controlled IMF for help. Why did the Philippines do that when it knows that the IMF prescribed bitter pill is not to the country’s advantage? Why blame the US or the US-controlled IMF for the failure of Philippine leaders to come up with a better solution?
    As I said before, Filipinos should overcome the regrets they may have about the choices that their leaders made for them.

  29. cvj

    Supremo, the US does not have to literally run to the IMF for the parallels to be valid since what is being compared are the alternative approaches of (1) repaying foreign creditors at the expense of the economy [aka our ‘bitter pill’ which resulted in a credit crunch] versus the current US approach of (2) prioritizing the real economy by preventing a banking collapse via taking on more debt.

    No arguments on the culpability of the Marcos dictatorship (and by extension the Philippines), but that is not what i’m arguing about in the first place. What i’m pointing out is that the US-controlled IMF gave bum-advice which the US itself, as it turns out, is not willing to follow. If the IMF (back in 1983) advocated a similar approach as the US is doing now, then it would have given advice that prioritized keeping the Philippine economy from collapsing while providing debt relief.

    I agree with you that there is no point in regretting but I believe it’s important to look back and compare current with historical events because it can be a useful guide to the future . The United States often presents itself as a ‘friend’ but a look back into such double standard that we’re seeing now would give a real insight into the nature of Philippine-American relationship and remove any illusions that others may still have.

  30. anthony scalia

    supremo,

    “In the US, a pension tax (Social Security) is NOT a tax on the pension received by the pensioner. The health tax (Medicare) is NOT like a VAT on moneys paid to health care professionals”

    appreciate your input, but the thrust of my discussion with Carl is the nature of the SSS/GSIS contribution

    Carl insists that the contribution is a tax, citing as example that the US, UK, Canada there is a pension tax, health tax etc.

    my point is that SSS/GSIS contribution is not a tax, so i pointed out that the ‘pension tax’ he is referring to is a tax on the pension received, and the ‘health tax’ he mentioned might be a tax on payments paid to health professionals

    in short, i wanted to tell Carl that his reference to pension tax and health tax in the US, UK., Canada is not apt

    wikipedia also cites a view that the FICA payroll tax isn’t really a tax “because its collection is directly tied to a benefit.” (wiki entry on FICA)

    here SSS/GSIS contributions are not viewed as tax.

    maybe Carl is using the US perspective when he wrote the comment i responded to

    “If this is right then contributions to the two pension funds can be inherited.”

    thats where the beneficiary comes in. he/she gets the benefits from the contributions (once the covered person dies). the beneficiary has the option of getting back all contributions paid by the covered person, so yes its possible the contributions may be inherited

  31. supremo

    cvj,

    It’s still a bum advice that the Philippines did not have to take. There might be other options but Philippine leaders took the road well traveled at that time.
    Also, the US always protect the broader economy in crisis like this instead of balancing the budget. That happened when Roosevelt became President during the depression and when the savings and loan crisis unraveled in the 1980s.

  32. cvj

    You’re right, Supremo, the Philippines did not have to take the IMF’s bum advice. In fact i remember that there were already people protesting against the IMF-WB conditionalities (and for debt relief) but they were often dismissed as communists or out of touch nationalists. Turns out they were on the right track.

  33. leytenian

    The Brilliance of McCain’s Move:
    Instead of signing on with the Democratic/Bush package, the House Republicans are insisting on replacing the purchase of corporate debt with loans to companies and insurance paid for by the companies, not by the taxpayers. That, of course, is a popular position. McCain would be comfortable to debate this issue division all day.
    Then McCain comes out of the process as the hero who made it happen when the president couldn’t and Obama wouldn’t. He becomes the bailout expert.

    Finally, McCain, as the reigning expert on bailouts, then can take the tax issue to Obama, saying that a tax increase, such as the Democrat is pushing, would destroy the bailout, ruin the economy, and trigger a collapse.

    http://www.rasmussenreports.com/public_content/political_commentary/commentary_by_dick_morris/the_brilliance_of_mccain_s_move

  34. hvrds

    In his book Age of Uncertainty, Robert Rubin warned about the “road runner” moment that was to come in financial markets.

    That is when the wily coyote would run past the cliff and then realize that there is no solid ground under him.

    Wamu went down when people finally saw that there was no bottom on the home mortgages and foreclosed homes that WAMU held on their books. They could and would not be able to sell off the homes (no market)fast enough to meet their reserve requirements or withdrawals. The excutives on WAMU gambled to get a better takeover deal for their shares. They lost their gamble

    So someone else with deeper pockets takes over their positions.

    How in heavens name are you going to help homeowners when the the valuations of the homes itself is a big unknown????

    The principal amount itself is a mystery.

    All proposed solutions must take a backseat to the most important reality facing the U.S. economy.

    Home values are deflating after a bout of irrational exhuberance. They are now in a state of irrational depression and still declining.

    It is a state of mind supported by facts that would tend to show that a ‘road runner’ moment is at hand.

    The one characterization most kids have of the wily coyote is that he is an idiot. We love seeing him get pulverized again and again.

  35. hvrds

    Someone should pass this on to Alex Magno and the rest of the theologians at the Foundation for Economic Freedom and the U.P. School of Economics – the main Madrassah that teaches the religion.

    They still believe in the religion of the free markets.

    “Market freedom is not a “fundamentalist religion”. It is a mechanism, not an ideology, and one that has proved its value again and again over the past 200 years. The Financial Times is proud to defend it – even today.”

    That mechanism cannot operate effectively without the foundation of civil society which is a tolerable rule of law and financial regulation.. That is where effective politics comes in… Trust with verification…. So help us God…

    Without it there are no working markets…..

  36. hvrds

    Who trusts Big Mike and GMA?????

  37. UP n grad

    cvj: debt relief to Pinas…. from taxes paid by Filipinos????

    because this is the model for the Paulson 700Billion bailout…. from taxes paid by Americans.

  38. KG

    CVJ,
    before we approached IMF in 83, we already requested for moratoriums from our creditors.
    ilang moratoriums,extended moratoriums,etc.
    wala ng gusto mag invest,more interest payments than capital inflows.
    That is why we have to resort to an emergency loan by imf-wb.

    maybe you are thinking what if we stood our ground and just default ala argentina and repair the system ourselves.

    panahon ni cory humingi ulit tayo ng moratoriums at thesame time, we kept on paying for a powerplant that has not produced a single watt.

    On undoing the follies of marcos,what has the cory have to offer,The pcgg,ano nagawa nila,wala,kung meron man prang wala ding nagyari.

    back to marcos and your advocacies on food security.
    you kept on hammering to have food security fist before industrialization.
    Marcos tried that,but what happenned, to his masagana 99 even before IMF went into the picture,
    madaming farmers ang nalubog sa utang,nagresulta ito sa marami ding banko na lumubog.
    idagdag panatin ang nga ibang kapalpakan na nagyari para mabaon tayo sa utang.

    so what part of the IMF-WB was ill adviced?please do enlighten me.

  39. cvj

    UPn, no i was not referring to the Paulson bailout.

  40. cvj

    Karl, the part about favoring austerity which resulted in our economic collapse in favor of paying off foreign creditors.

  41. cvj

    …but of course, that’s not the only mistake by the IMF. In the first place, the ideology of financial liberalization [aka financial globalization] was ill-advised and can be considered a failed experiment (just like communism was considered a failed experiment back in 1989).

  42. KG

    Austerity did force us to reduce public spending and subsidies just so we could refinance our loans.

    But as early as the Aquino administration we asked for debt forgiveness,but for some reason we were not allowed,because only 20 % of our debt was official and the rest were with commercial banks(1991), US forgave Poland,but they have 69 %official loans .US also forgave Egypt.

    We asked to be helped by a global financial institution even as far back as the 60s of course we would be exposed to the “ideology” of financial globalization.

    IMF was a lender of last resort,so we fouled up first before they came in.

    now you want us to do an argentina, and default.
    were would you think we can get our money to spend?
    exports?remittances?domestic investment?manufacturing?Isolation? nationalization of everything???

    argentina was big enough to export itself out of their problems,we don’t have the capacity to emulate that.

    maybe we could just borrow from MetroBank and BDO,and the rest of the banks.If global financial system was not introduce in our country, our banks who lent money to the various spvs(like subsidiaries of lehman,meryll lynch) in order to clean up their balance sheets would never have to happen.

  43. KG

    CVJ,

    Since you blame failed experiments; I give you Peter
    Senge:

    “Systems thinking shows us that there is no outside; that you and the cause of your problems are part of a single system.”

    “Today’s problems come from yesterday’s ‘solutions’.”

  44. cvj

    Karl, you’re justifying the Establishment [aka the status quo] by saying that they had no choice. I’d attribute it to lack of political will and a misplaced faith in neoliberal ideology on the part of the Macapagal admin, the Marcos Dictatorship and the Aquino, Ramos, Erap & Macapagal-Arroyor admins that followed. It’s not like there was no alternative path being offered by the Left and the Nationalists, for example.

    Since you blame failed experiments; I give you Peter Senge:

    “Systems thinking shows us that there is no outside; that you and the cause of your problems are part of a single system.” -KG

    I agree, and i said pretty much the same thing here.

    . A distinguishing property of all systems is that it is closed off from the outside world in the sense that it can perceive only those things that the system will allow itself to perceive….cvj, March 25, 2008 at 1:00am

    That’s called autopoeisis.

  45. KG

    What the, I mean what alternative path?

    ang inagsak ang rehimeng marcos,aquino,ramos,estrada,macapagal arroyona mga tuta ng imperialistang amerikano?

    I read that Niklas Luhmann piece in your blog about Systems theory.

    back to the left.

    let us take a look a t their preamble:
    Preamble, Constitution of the Communist Party of the Philippines, 1968
    “ So long as it resolutely, militantly and thoroughly carries out its ideological, political and organizational building, the Communist Party of the Philippines is certain to lead the broad masses of the Filipino people of various nationalities and ethno-linguistic communities to total victory in the national democratic revolution against US imperialism and the local reactionaries; and bring about the start of the socialist revolution. ”

    —Armando Liwanag, Chairman, Central Committee of the Communist Party of the Philippines

    What alternative path???
    Sino ba ang mayaman sa partido,san ba napunta nag mga revolutionary taxes nila, di ba sa treasurer lang at sa mga higher ups. nasan ang iba na nasa kilusan ? malamang nasa Tate

    oo naniningil sila sa mga corporation, pero di sila dun tumitigil pati mahihirap si nakakalusot ,kinokolekthan din nila.So how can they lead masses to prosperity???

    you always say that i am justifying,rationalizing and what not, ikaw anong giangawa mo di ba ganun din, justifying and rationalizing???

    Still I ask, what alternative path?

  46. cvj

    Karl, why is it that when i say ‘Left’, it immediately defaults to Joma Sison? Wasn’t that Ferdinand Marcos scare-tactic as well?

  47. cvj

    Also, I wasn’t questioning your ‘rationalizing’, but pointing out that there were alternatives to the status quo that were not taken. It’s not like there was no choice or that there were no one advocating these alternative choices. I’ve discussed what i believe are the alternatives in my blog.

  48. KG

    Chuck,

    Marcos was different,he even called farmers communists, I do not want to be associated with marcos, as you don’t want to be associated with the communists.

    Since you say no one is advocating the alternative choices,what do you call your self?

    Benign0 already has a name for your advocacies,he calls them by describing them as cvjesque.

    Ok I don’t want to go 1 to sawa here,till next update..

  49. KG

    OOPs, I mean ’til next update

  50. cvj

    Karl, i did not say “no one is advocating the alternative choices“. In my blog, i took care to cite the proponents, for example, the Sumilao farmers for land reform.

    I know you’re not like Marcos which is why i was surprised when you resorted to bringing up the Communist-bogey. The Left is not just the communists you know. Besides, some of my advocacies (such as the flat tax and removal of minimum wage) cannot even be considered to be coming from the Left.

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