Ok, first things first.
DR1 has been lately, hmm how can I say this in a manner that is not too blunt, shall we say dead?
The debates section is dead. The living section is so so. The business section would be bankrupt by now in a real business. The environmental section has never been too exciting, but even on its own standard is so and so.
DR1 is in the duldrums. For this reason I think its time for a little crancking of the stove and stirring the pot a little.
What better subject than those annoying (let's face it, they are annoying) street vendor and taxes (which are even more annoying than the first one!)
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There is a tremendous problem in this country and this problem is not just limited to this country alone. The problem is called "the informal economy".
What is the informal economy? Any company, individual, etc who conducts a form of business beyond the radar of the authorities. These businesses don't pay taxes, are extremely inefficient, and penalize the more productive firms at the expense of consumer, national well being, and the general productivity of the country.
What happens when a peso is goes to a street vendor as oppose to a legitimate business? Well, keep reading...
That peso suddenly is not taxed! What does this means?
This means that if the government was to maintain tax levels constant (ie. not raise or decrease them), each year the government would be receive less and less tax revenue.
Why is this the case?
Because more and more people are diverting more and more pesos to illegitimate businesses that are not getting taxed.
How does the government makes up the difference?
There is only one way, increasing the tax rates in order to keep the same revenue stream.
Who gets penalized with each tax increase?
The middle classes and the legitimate businesses, which happens to be the most productive and efficient businesses in the country!
What do legitimate companies do when this occurs? They increase their prices.
Who gets hurt when this happens? The consumer!
Phew, now lets review how did all of this came to be!
It just so happens that people spend money in the informal sector for one of two reasons:
1. Sympathy
2. Convenience
For those who feel sympathy for those "struggling" people trying to live by selling illegitimately in the street somehow feel that they are doing something good by penalizing those people who took a job in a legitimate business!
How can I explain how wrong and hurtful this act of what would seem to be goodwill is to a society is really complicated, but I will suffice this by saying that if you read the book Freakonomic, you will understand how often reality is not what people think it actually is!
Everytime you give money to a illegitimate business, you are doing more HARM than GOOD. As hard as it is to believe, YOU ARE!
For those who only care about convenience, well tell that to the clerk who works in Plaza Lama or in La Sirena. Go right ahead, tell him/her that you will penalize his/her decision to work in a legitimate business because the guy who walks right up to your window on the intersections is much more convenient. I'm sure the workers of La Sirena will understand!
In conclusion,
If people want to see taxes drop or at the very least remain the same for a lengthy period of time, STOP SUPPORTING THE INFORMAL SECTOR.
You will be doing much more good to the country, you will be giving more goodwill, you will be helping the country in a much better fashion by supporting businesses that are legitimate and efficient rather than support inefficient and illegal businesses that simply causes the price of everything and taxes to increase at the expense of the very same people we are all trying to help out of poverty!
Now, let's debate! Good, bad? What do you think? For the sake of DR1, let's start the debate!
-NAL
DR1 has been lately, hmm how can I say this in a manner that is not too blunt, shall we say dead?
The debates section is dead. The living section is so so. The business section would be bankrupt by now in a real business. The environmental section has never been too exciting, but even on its own standard is so and so.
DR1 is in the duldrums. For this reason I think its time for a little crancking of the stove and stirring the pot a little.
What better subject than those annoying (let's face it, they are annoying) street vendor and taxes (which are even more annoying than the first one!)
--------------------------------------------------------------------------
There is a tremendous problem in this country and this problem is not just limited to this country alone. The problem is called "the informal economy".
What is the informal economy? Any company, individual, etc who conducts a form of business beyond the radar of the authorities. These businesses don't pay taxes, are extremely inefficient, and penalize the more productive firms at the expense of consumer, national well being, and the general productivity of the country.
What happens when a peso is goes to a street vendor as oppose to a legitimate business? Well, keep reading...
That peso suddenly is not taxed! What does this means?
This means that if the government was to maintain tax levels constant (ie. not raise or decrease them), each year the government would be receive less and less tax revenue.
Why is this the case?
Because more and more people are diverting more and more pesos to illegitimate businesses that are not getting taxed.
How does the government makes up the difference?
There is only one way, increasing the tax rates in order to keep the same revenue stream.
Who gets penalized with each tax increase?
The middle classes and the legitimate businesses, which happens to be the most productive and efficient businesses in the country!
What do legitimate companies do when this occurs? They increase their prices.
Who gets hurt when this happens? The consumer!
Phew, now lets review how did all of this came to be!
It just so happens that people spend money in the informal sector for one of two reasons:
1. Sympathy
2. Convenience
For those who feel sympathy for those "struggling" people trying to live by selling illegitimately in the street somehow feel that they are doing something good by penalizing those people who took a job in a legitimate business!
How can I explain how wrong and hurtful this act of what would seem to be goodwill is to a society is really complicated, but I will suffice this by saying that if you read the book Freakonomic, you will understand how often reality is not what people think it actually is!
Everytime you give money to a illegitimate business, you are doing more HARM than GOOD. As hard as it is to believe, YOU ARE!
For those who only care about convenience, well tell that to the clerk who works in Plaza Lama or in La Sirena. Go right ahead, tell him/her that you will penalize his/her decision to work in a legitimate business because the guy who walks right up to your window on the intersections is much more convenient. I'm sure the workers of La Sirena will understand!
In conclusion,
If people want to see taxes drop or at the very least remain the same for a lengthy period of time, STOP SUPPORTING THE INFORMAL SECTOR.
You will be doing much more good to the country, you will be giving more goodwill, you will be helping the country in a much better fashion by supporting businesses that are legitimate and efficient rather than support inefficient and illegal businesses that simply causes the price of everything and taxes to increase at the expense of the very same people we are all trying to help out of poverty!
Now, let's debate! Good, bad? What do you think? For the sake of DR1, let's start the debate!
-NAL
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