Paying taxes should be user-friendly

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Ma. Isabel Ongpin

TAXES have to be paid to the State that is managing our society, our lives, our fates. So, the State imposes and we pay. But taxes should be paid in a user-friendly manner, not for taxpayers to be made to jump through hoops of red tape, bureaucratic pettiness and unfair demands.

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There is a new tax reform bill in the offing and while reform and efficiency must have been on the minds of the professionals who devised it, there is much that can be improved, much that should be left out and much that still
has to be discussed for a rational and fair conclusion of exactly what it will demand in the form of taxes.

I am no tax expert so I leave the rates, the VAT charges and what is taxable to them. What I am concerned about is the manner and the methods of collecting taxes, particularly from ordinary, run-of-the-mill businesses known as small and medium enterprises.

What is very surprising is that there is a provision requiring an electronic sales reporting system from the small and medium enterprises so that the Bureau of Internal Revenue (BIR) will receive by electronic transfer sales receipts and sales invoices transmitted directly to it at the same time and date of each sale transaction.

The above is too demanding in a Third World country with haphazard electrical power, poor electronic communication and people who are not quite savvy in the use of electronic devices involved in these businesses. And we are a Third World country, in case the tax bill proposers are not aware that sari-sari stores, carinderias, market stalls, small retail shops, and such make up the majority of our small and medium businesses.

While the proposed bill raises from P50,000 to P250,000 the amount of sales of those required to use “simplified books” of accounts, and from P250,000 to P750,000 those whose books of accounts are required to be audited by an independent auditor yearly (a certified public accountant), the figures are not quite realistic. Small and medium business enterprises of the Mom and Pop variety can easily breach P750,000 sales at today’s inflationary rates and they are still small potatoes vis-à-vis their bigger counterparts in business. And forget about P250,000; a sari-sari store can easily make that amount of sales. It is not the sales figures but the profits that should count when demanding investment in capital goods such as electronic systems. From present circumstances, none of these small and medium enterprises can tolerate or manage the expenditures for electronic reporting. They just do not make the kind of profit to justify the investments required.

It should be local governments and other government agencies that deal with them and collect their taxes that should have the electronic reporting. Demanding it from small and medium enterprises as understood and actually exist here is being onerous and very user-unfriendly.

The truth is the BIR by tradition focuses on those who pay their taxes regularly looking for something anomalous to catch them at. Or, new demands in paperwork and other extras. Then they come with assessments, demands for about five kinds of books, special receipts that can only be obtained from their recognized printers.

This is my experience. Against my late husband’s advice never to be a landlord, I thought I was smarter and had a house in Alabang rented out. I duly registered it as a business (though this is something that majority of landlords do not do because the cost of a business license was quite hefty). When VAT was installed, I duly paid the VAT. And of course, the income tax too. Meanwhile, paying the taxes, business license fees was an ordeal. It would take two days to get through with it in Alabang. Moreover, the then mayor in a sudden and unforeseen move just before a payment deadline demanded that since it was a house for rent and therefore a “public place” like a hotel lobby where people come and go (he was thinking of the Makati hotel that figured in a coup attempt), I had to pay insurance as a public place (despite already having insurance on the house). And of course, the insurance company was designated by him and you could avail of no other.

Meanwhile, the BIR kept sending me every year demand letters requiring a long list of documents, books, receipts, etc. for one house for rent. I have a feeling the unregistered houses for rent were never bothered. They never complained. The BIR’s homework, detective work, whatever, is not thorough enough to catch them. It also seems to ignore the Big Fish tax evaders preferring to concentrate on the small and clueless taxpayer. The BIR requires that one uses receipts from their designated printer who of course would not print the limited number required for just one house but a minimum number that could have covered a dozen houses for a decade. And so it went year after year, of inspections, demands, requirements and threats. I had to hire a lawyer to deal with them. And if you ask me, the better part of the income realized was spent on all of the above. Fed up, I resolved to sell the house and I did.

Taxes were paid, the CAR was given, the transaction was completed. Came the BIR again for the usual, and I happily told them I had sold the house, showed the VAT, capital gains tax paid and all other required payments, etc. Guess what, they then demanded that I give them a photo of the house I no longer owned. This time I told them to go somewhere hot.

We would willingly pay taxes in a user-friendly manner without inquisitorial visits, unreasonable demands and petty behavior. Tax reform proponents, please take note.

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