• Go slow on new taxes, get quick on tax evaders

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    Tita C. Valderama

    COSMETIC products have become more popular with younger women nowadays, or so it seems.

    During my teenage years, we got to wear make-up only on special occasions such as school presentations, graduations and the like. Nowadays, you see young girls, some even in their high school uniforms, wearing lipstick, enhanced eyebrows and nail polish.

    I don’t have figures to back up my assertion but take notice of the young girls who may have more than enough allowance to spare on cosmetic products, mostly girls enrolled in exclusive schools.

    It could be a consequence of the selfie craze. Girls have become more vain because they want to look better in their selfie shots for Facebook or Instagram.

    An obscure party-list representative may have noticed this, as he has proposed the imposition of a “vanity tax” on make-up and other beauty products as an alternative to increasing the excise tax on petroleum products.

    Rodel Batocabe of AKO-Bicol party-list considers cosmetic products as a luxury while petroleum products are a necessity.

    “While the poor can avoid the use of beauty products, they, however, cannot avoid using public transportation or purchasing basic commodities,” Batocabe pointed out.

    The lawmaker noted that sales of cosmetics have been rising in the last decade as consumers see beauty products as necessities rather than luxuries.

    His bill seeks to impose a tax of up to 30 percent on the wholesale price or import value of beauty products, including perfumes and toiletries.

    Batocabe’s proposal quickly drew violent criticisms in social media. Other lawmakers have also objected to it. Senator Sherwin Gatchalian, chairman of the committee on economic affairs, said the proposed vanity tax is not only “discriminatory” to women but also not a “viable alternative” to the planned additional tax on petroleum products.

    He noted that the proposed 10 to 30 percent “vanity” tax was projected to raise P6 billion to P9 billion in tax revenue, which would only be between 4 and 13 percent of the P148.2 billion expected revenue from the proposed excise tax on fuel.

    Imposing new taxes or increasing existing tax rates has never been a popular move. New or additional taxes, in fact, become a source of disenchantment, especially when it goes against a promise to lower the tax burden of workers.

    Taxing already overburdened consumers has always been a convenient recourse for revenue-hungry governments.

    But for as long as we see government officials and their families living beyond their means, for as long as corruption exists in government offices, for as long as taxpayers take time to line up and live with inefficient government services, paying more taxes will never be an acceptable option to raise money that might only go to corruption.

    The Duterte administration has proposed to Congress a tax reform package that includes lowering income taxes, which would mean a P127.4 billion revenue loss. But it plans to offset the revenue loss by increasing the excise taxes on cars and fuel, and expanding the value-added tax base. This is expected to generate P301.6 billion, giving the government P174.2 billion net gain on its first year of implementation.

    Rep. Carlos Zarate of Bayan Muna party list has pointed out that indirect consumption taxes such as value-added and excise taxes of cars and petroleum products would hit the poor the hardest because these are ultimately passed on to consumers regardless of their salary levels.

    “Burdening the poor even more while protecting the rich and big corporations is very regressive and characteristic of the neo-liberal economic policies of past administrations that are still being pushed by the current economic advisers of the administration,” he said.

    Another attention-seeking congressman has broached his proposal to tax excessive purchases of electronic gadgets and appliances, which, he said, have become a hobby for men.

    Rep. Mark Aeron Sambar of PBA party list said that while gadgets like cell phones have become a necessity, owning an excessive number of them is already a luxury.

    “We need cell phones but we don’t need five or six cell phones or 10 cell phones. That’s the aim of this bill. It’s just to prevent people from buying too much of a certain product and, at the same time, generating income for the government,” Sambar said.

    The congressman has yet to explain how acquisition of gadgets and appliances can be monitored to determine the tax liability. Perhaps he’s just worried that the government may not have enough money for his “pork barrel”.

    Given the overwhelming number of administration allies in Congress, President Duterte’s tax package may yet be approved without much debate or thought about its impact on consumers, particularly the middle-class which is already bearing the heaviest tax burden as the government’s tax collectors fail to run after the high-earning professionals and corporations who manage to evade and avoid payment of the correct amount of taxes.

    Zarate has cited data from the Department of Finance showing revenue losses of the Bureau of Internal Revenue at P400 billion and P200 billion for the Bureau of Customs in 2012.

    Whew, that’s a whopping P600 billion, if Zarate’s figures are correct!

    Instead of burdening consumers with new or higher taxes, why can’t the revenue-generating agencies improve their tax collection efforts by going after those who avoid paying the right amount of taxes through the use of accounting dirty tricks?

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    2 Comments

    1. Well said ma’am. It is ironic that the Duterte administration that is supposed to help the poor ends up adding more tax burdens on them while reducing the demands on rich individuals and corporations. Nevertheless as you have stated, it would be even better if the authorities go after those individuals and corporations that have been evading or under paying their taxes. Perhaps this is one area that Duterte could employ the same enthusiasm as his so called war on drugs.

    2. My friends all understate their income to evade tax, whether private or commercially made.When I chastise them, they respond that firstly “everybody does it”, and secondly that they might not do so if they had more confidence that the money would end up benefiting the public rather than government officials or staff. Ending corruption should be linked to tax collection policies.