MALACAÑANG on Tuesday said the Bureau of Internal Revenue (BIR) will continue to “persuade” professionals and leaders of the industry sector to avoid “punitive” government action by paying their tax dues correctly and on time.
“We do not intend to malign or humiliate any particular group. Our call is for them to do their share in economic development. This is a persuasive and not a punitive effort,” said Presidential Communications Secretary Herminio Coloma Jr. who defended the BIR from criticisms over a controversial advertisement that depicted doctors as tax cheats.
Coloma explained that the advertisements are only part of a series that will also highlight other professionals and even business establishments that failed to pay the right taxes.
“We are appealing to their civic spirit because they are also Filipinos. They also would want to help in nation building and that’s what we want to see,” Coloma explained.
He said that it is common knowledge that there are establishments that report unreasonably low taxable income despite high patronage.
“It seems incredible that they earned so little,” he said.
The Palace official warned that the BIR would not hesitate to resort to “punitive” actions against tax evaders.
“[Punishment] could come in later through the existing Run After Tax Evaders and Run After Smugglers [campaign],” Coloma stressed.
Coloma justified the Internal Revenue bureau’s campaign as an effort to widen the tax base to reach income targets under the Philippine Development Plan (PDP). He cited that prior to the Asian financial crisis in the late 90s, tax-to-GDP (gross domestic product) ratio was at a high 17 percent. At present, he said the ratio only stands at 13.6 percent.
“The BIR is trying to cast a wider net for greater participation. The aim is to get more people to participate in the revenue generation effort . . . Taxes are the lifeblood of the economy,” he pointed out.
In accordance with the PDP goals, Coloma further explained, the BIR campaign is to intensify efforts to increase the country’s tax-to-GDP ratio to 16 (percent) to 18 percent by 2016.
“The government is committed to strengthening its tax collection efforts and make its tax-to-GDP ratio at par with its Asean counterparts. According to a World Bank report, the tax effort of Thailand, Malaysia, and Singapore stands at 17.6 percent, 16.1 percent, and 13.8 percent, respectively,” he noted.
“Today, we can see that our taxes are going where they should, and therefore, there is no reason not to pay the proper taxes. I say to you: It’s not just the government, but our fellow citizens, who are cheated out of the benefits that these taxes would have provided,” he emphasized.
The official said they would course their call through various professional organizations that must urge their members to pay the right taxes and help in the country’s overall economic development efforts.
With regard to the complaint of the Philippine Medical Association against the “offensive” tax advertisement, Coloma said the group should “look at the bigger picture.”
“The bigger picture is that we need more tax collections to be able to fund our economic development programs, and we feel that they can sit down with the BIR and the Department of Finance and thresh out their differences, so that a win-win approach may be arrived at,” said the official.