The current Income Tax Return (ITR) form as devised by the Bureau of Internal Revenue (BIR) is all of 12 complicated pages long. It seems to be made with big time manufacturers and people with humongous incomes in mind. Certainly it is beyond the ordinary taxpayer like you and me. We may be educated, literate and willing taxpayers but we cannot figure out the BIR form. Yet apparently this form is also for sari-sari storeowners, street vendors, cottage industries and smaller than small businesses or sources of income. Such as P10,000, P20,000, P30,000 yearly (ever so out-of-date figures to pay tax on at today’s prices).
We all agree that taxes have to be paid as the expenses to govern and provide basic services come from funds raised by taxes. Paying taxes is a duty but it should not be turned into a strict penitential rite that will inevitably raise resistance. The 12 page form of dense questions and repeated requests for already given information at the start plus demands for listing each and every asset, trust, gift or whatever where taxes and information are already with the appropriate government agencies that pertain to these transactions, is a penance. Worse, the confidential information is redundant and only gives opportunity for extortion and harassment when a taxpayer is liable to forget a detail or gives up and files carelessly.
It seems the BIR wants everything on a silver platter. Taxpayers must comply even if they do not understand or are incompetent to follow complicated instructions. The BIR then will decide strictly and to the letter of their dense form whether compliance is correct or not, and throw in the penalties, audits, etc. if it deems not. Think of the P10,000, P20,000 and P30,000 incomes when taxpayers have to seek paid professional help to get through the form. No one in these brackets can afford it, there should be separate simplified forms for them and for that matter everyone else and leave out demands for information that is already with the relevant government agency and is not germane to the matter at hand. It is redundant to state what one paid in capital gains, interest and dividend income, etc. when it has already given and paid to the appropriate government agency.
Why must every asset owned and not in play for the year be listed? This is unnecessary delving into privacy and offers information not for taxes due but for fishing expeditions. We have all heard of BIR letters demanding audits based on suspicions rather than relevant information to be answered in five days. The language of the letters is also unnecessarily menacing. It is enough to panic anyone, mostly upright taxpayers and actually opens the door for under the table transactions to remove the threat. Is every BIR employee given unnecessary private financial information vulnerable to temptation to use it for their own (not government’s) benefit?
So this is the beef with the BIR: It asks too much information beyond necessity and its form is so dense with questions that taxpayers cannot cope with it, opening doors for private extortion, political persecution or extralegal arrangements, if worse comes to worse.
To repeat, the form demands that non-operating income taxed at the source such as dividends, capital gains, etc. must be reported again. Why must taxpayers who already reported it have to report it all over again with high chances of forgetting or making an error that will bring them sanctions, if not worse?
BIR seems to be changing rules arbitrarily and demanding penalties based on these whimsical and illogical changes, yet it keeps missing its targets.
It may be more successful if they made the income tax paying process easier, clearer, more logical and user friendly. A dialogue with taxpayers concerned should be in the works when new and different ways of taxation are proposed and the taxpayers’ opinion and advice accepted within reason. Or else, disgruntled and combative taxpayers will fight back by going to court or resisting in other ways.
It was erroneous for the BIR to demand income tax on condominium owners’ dues as they are homeowners for which a Magna Carta for Homeowners Law exempts them. They could have had a dialogue first. It was equally wrong to demand that doctors, lawyers and other professionals list their clients’ names and fees. It violates professional and client confidentiality for which resistance resulted.
If the BIR wants taxes in the right amounts to be paid, it should go about it the right way using information, simplification, understanding and correct behavior to the taxpayer. It should be user friendly, which it is not. Persuasion and sanctions within acceptable limits in this context is the only way. Maybe then it will meet its targets.