The taxman beckons


YOU get a glimpse of the level of corruption in the Philippines by seemingly mundane utterances of its people across the social spectrum in the form of quips, advice and shoptalk: “In government (agencies) it’s all about money.” In Filipino: Sa gobyerno pera-pera lang ‘yan.

An auditor in private practice was overheard advising a rank-and-file employee of a firm he was working for: “You want to lower your income tax? Write in your exemptions you contributed P25,000 to a charitable institution, say PCSO. The BIR won’t be able to trace that. Just tell them you made bets on the Lotto.”

There is also the exasperated young housewife telling his balikbayan uncle over dinner not to pay the city government any business tax. “Naku, they’ll just pocket your money. They don’t even have any manners.”

Well, it’s that time of year again when Filipino taxpayers will try to beat the April 15 deadline in settling their dues to government.

Data from Trading Economics, a portal for economic indicators, shows the corporate income tax rate in the Philippines is 30 percent and the individual income tax rate is 32 percent. This means that individual taxpayers are paying P2 more for every P100 of taxable income compared with the corporations.

Why? Perhaps because of the vast difference in the absolute amount paid by companies versus individual income earners? It’s best to ask Ms. Kim Henares. For sure, the BIR chief has a logical explanation for the discrepancy.

But then again, why do we have to pay taxes? The Budget Briefer of the Congressional Policy and Budget Research Department notes that tax revenues partly support the proposed obligation budget of any fiscal year. The Cabinet-level Development Budget Coordinating Council (DBCC) sets the revenue target. For example, the collection goal this year is P2.337 trillion or 15.8 percent higher than the P2.018 trillion in 2014. By any standard that’s a lot of money.

“By source, 73.6 percent or P1.72 trillion will have to be generated by the Bureau of Internal Revenue (BIR). Of this, around 60 percent (P1.032.8 trillion) will come from income tax while close to 22 percent (P372.4 billion) will come from sales taxes.”

The rest will come from other government agencies, corporations and financial institutions.

The government already revised its collection goals twice this year, admitting the difficulties of consistently meeting the revenue targets.

But the Philippines is among the countries that have so far instituted taxation reforms as PricewaterhouseCoopers cited again and again in its publication, “Paying Taxes 2014,” a collaboration with the World Bank/International Finance Corporation.

In particular, Malaysia and the Philippines were the only countries in Asia and the Pacific that have “further rolled out their electronic systems.” For having such a system in place, the Philippines and Thailand have made it easier for their taxpayers to settle their dues by having 12 tax payments fewer as of 2012 than in 2014.

Encouraging words, indeed, but the Philippines would fall flat on its face when compared with Hong Kong’s number of tax payments at 3. How Hong Kong did it is another mystery the Philippine Taxman must unravel, considering that the Special Administrative Region is lumped with mother China on the lower rung of the corruption index at 36.

Easier tax payments, but revenue goals are unmet. This brings us back to the issue of corruption. We did not actually flunk the Transparency International’s Corruption Perceptions Index 2014, but as a nation, we belong to the bottom half of the rankings that range from 0 as most corrupt to 100 as not corrupt.

“Together with India (38) and China (36), the poor scores of other emerging markets in the region—such as Malaysia (52), Philippines and Thailand (both 38) and Indonesia (34)—indicate a generally weak or ineffective leadership to counter corruption, posing threats for both sustainability of their economies and somewhat fragile democracies.”

As José Ugaz, chair of Transparency International, succinctly put it: “Countries at the bottom need to adopt radical anti-corruption measures in favor of their people. Countries at the top of the index should make sure they don’t export corrupt practices to underdeveloped countries.”

Now, this surely sounds familiar when the twin issues of corruption and taxpayers’ money are scrutinized. Again, quoting Transparency International:

“Poorly equipped schools, counterfeit medicine and elections decided by money are just some of the consequences of public sector corruption. Bribes and backroom deals don’t just steal resources from the most vulnerable—they undermine justice and economic development, and destroy public trust in government and leaders.”

Ah, Philippines, our Philippines. We have such a long way to go. The electronic payments’ system is one big step the BIR has taken. But the situation begs for far more simplicity, fairness and freedom from the grip of endemic corruption.


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1 Comment

  1. Why would you ask kim hinaires why the corporate tax is 30% & income tax is 32%. Its the government who sets the tax limit not the bir.
    In the uk we have a budget twice a year. The government tells us what taxes we pay & in income tax we have different percentages for different earnings. The lowest earners are free from tax, plus they can get government helpif they meet certain criteria.
    Now this government or any previous government doesnt give a fig about you the individual. They dont care, what each one cares about more is how they can steal monety from government coffers.
    I think they want more ofw’s as the more they have the more foreign money this country gets plus all that money keeps this country afloat. With no ofw’s this country is bankrupt.
    Its so strange the average filipino doesnt talk of these things, they hate thinking of these things & the government likes it that way.. People need to get involved & get things sorted. Get all governent workers paid & stop these extra payments. Im on about the gcocs, you know the government owned corporations, get their bonuses & allowances stopped as its a way of getting free income & that income is more than their income.