• It’s not just professionals who ‘doctor’ their taxes

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    A long forgotten government functionary during the Cory years audaciously claimed      that the Philippines was actually a rich country pretending to be poor.

    He was not too far off the mark.

    If everyone—repeat, everyone—paid the proper taxes, then the government would literally be awash with cash. The country would not have to struggle to exit Third World status. The Philippines would be one of the richest countries in the region.

    Unfortunately, tax collection remains one of the weaknesses of the government. Either through loopholes in the Tax Code or via outright tax evasion, corporations and high value individuals are able to underpay or to avoid paying what is due the government.

    Recently, the Bureau of Internal Revenue (BIR) took aim at the medical community. On the suspicion that too many physicians do not pay correct taxes, the BIR came out with an advertisement that had the Philippine Medical Association fuming.

    “Why single us out?” the PMA asked.

    Why indeed? While it is true that an unknown number of doctors do not pay the right taxes from their professional fees, it is equally true that an equally unknown number of lawyers, accountants, architects, movie stars, chefs, contractors and entrepreneurs also “doctor” their income tax returns year in and year out.

    To be blunt about it, even the smallest businessmen such as sari-sari store owners, buy-and-sell traders, taxi drivers, sex industry workers, tourist guides and all sorts of self-employed men and women who do not issue official receipts can be labeled as tax cheats.

    Then there are the big businesses.

    It is no secret that even Top 1,000 corporations resort to “creative” accounting to minimize, if not avoid, paying the government what is due government.

    As an example, it was recently revealed that a small hotel chain had actually paid more in taxes than the biggest chains operating in the country. Surely a small chain grosses far less than the medium-sized ones, and far, far less than the giants.

    So what seems to be the problem?

    The individuals and corporations which do not pay the full taxes will almost always say that they believe that there is no point in paying what they should: much of it would be lost to graft and corruption anyway.

    How many tax evaders, they ask, are locked up in the New Bilibid Prisons?

    One estimate places at a breath-taking forty percent the total that is lost to graft and corruption. Think about that for a minute. For every peso paid the government in taxes, forty centavos goes to the pockets and bank accounts of the corrupt.

    Oh, there may be small-time government bureaucrats whose lawyers were unable to get them off the hook languishing in prison, but not a single truly Big Fish has been imprisoned for tax evasion. Ever.

    In this context, it was not right of the BIR to single out doctors in what amounted to a shame campaign. BIR Commissioner Kim Henares may have had the best intentions, and may have had the support of Malacañang, but surely she knows that the Filipinos who do not pay the proper taxes number in the millions. Singling out a segment of the population is plain and simply unfair.

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    5 Comments

    1. Claro Apolinar on

      I agree completely.

      But what is this article–the editorial for this issue or a column? Or a letter to the editor? Why no author’s name?

    2. Arthur Keefe on

      All this is true. When my middle income friends speak with envy of the British National JHealth Service, I remind them it is paid for from taxes. Similarly our good roads and public services in general. I doubt if any of them pay their full taxes here, and I know for certain that most do not. Their response to my challenge on this is as stated in the article, that is they dont want to line further the pockets of corrupt politicians. Tax evasion occurs everywhere, but it is the scale of it here, and the complete lack of shame which is so concerning.
      There is no way that Filipinos can enjoy the security and quality of life of those in the West if people are not prepared to contribute to it through honest tax returns.

    3. we need to fix the nationwide corruption first, then we can get to fixing the tax problems. there are way more cash lost to corruption than from what you say are lost to collection. we in the philippines are theoretically over taxed, and over plundered as well. corruption is a way bigger problem in this country and in a different league generally than the common tax problems.

    4. Gregorio Cacanindin on

      Let Kim Henares do her mandated job. She’s a truly public servant who run after tax cheaters. As long as she catches the rats, I don’t have a problem with that.

    5. we cannot avoid such mess, even in developed countries like USA, Canada, etc.. but it’s should held the government accountable for all the taxes collected…what happens here in this country only the politicos enrich themselves to the fullest at the expense of the taxpayers…we should amend the law that only the taxpayers can vote and those lapdogs (masa) of the trapos cannot vote unless they pay taxes…change comes immediately to this country if it happens…..