The ongoing BIR problem with taxes

Though the noise truly began when BIR released the “shame” campaign against doctors a few weeks ago, this battle actually began as early as the last quarter of last year. The BIR was specifically tasked with aggressively going after tax evaders and collecting an astronomical amount by 2014 to make up for taxes that, according to the government, have not been paid in the years past.

Despite the rough road, I believe that BIR Commissioner Kim Henares is doing a fine job  in her position. It is, after all, a truly thankless job and she definitely hears it from both sides. I believe she is strong and doing the best she can with her numerous responsibilities and the heat she gets from everyone. I think that despite missteps that, lets face it, can happen to anyone, she is doing the best that she can to meet the BIR target for the year ahead.

However, that does not erase the fact that the BIR has employed some puzzling tactics in an attempt to collect more taxes this 2014. I must admit, I am puzzled (as I am sure many citizens are) about the ongoing “name and shame” campaign the BIR is running on various advertising platforms. It’s a really bold move on their part, and it says a lot about the state of taxes in the Philippines.

According to studies released by the BIR, tax evasion is a common problem in the country. So many people are not filing or paying their proper taxes. And this is not limited to professional careers alone but also big corporations. In fact, the latest ad released by the BIR names top 100 corporations in terms of gross revenues and calls them out on their taxes as well. Of the top 100 companies named only 39 are a part of the BIR’s Top 500 Non-Individual Taxpayers for 2012.

That is a staggering number indeed and definitely one that will make the long-suffering SME groups very upset, for while they are feeling the non-stop heat from the BIR when it comes to paying their taxes, it can be seen those big corporations that are earning so much more than them, are not. How is that fair? Is it right? And how is it even possible? It’s possible because these companies can afford to hire a battalion of lawyers called abogado de campanilla and financial wizards who can help them move their finances around and help them when it comes to surrendering their tax payment. Seriously, it’s no wonder we having shortfalls when it comes to tax collection, there are just too many lawyers and too many loopholes.

However, as much as I understand the difficult predicament the BIR finds itself in, I also see the side of the people when it comes to being angry over all of the new red tape and hassles when it comes to filing taxes. One rotten apple in the barrel apparently spoils the entire bunch and now the BIR is just going after everyone with the same fervor as it does tax evaders. In a way, it seems as if they are just cutting out reasonable doubt and assuming everyone is a tax evader and going from there. It’s definitely not a popular stance to take and will definitely continue to cause very bad reactions. Perhaps it’s necessary though in order to get where we need to be? I guess only time will tell.

I think the BIR would also benefit though from seeing how tax collection looks in the eyes of the people. The ones who are suffering the most in the continuing tax battle is the practically non-existent middle class. Obviously, the poor don’t have the money to pay taxes (at least in the incredible amounts required) and the rich have the means of protecting their assets. It’s those in the middle that are left with no defense and end up paying half or more than half of what they earn being left with virtually nothing. It’s no wonder they are fed up.

Plus, and I believe I’ve said this before, I believe that people would be more willing to jump through the hoops when it comes to paying their taxes if they could see that their hard earned money was being funneled back into the country for their benefit. After all, isn’t that what taxes are for? So that the government can use them to drive the country and for the benefit of all? No one sees that happening here which is why they are so angry that the government is squeezing them for all they have. After all, when you’ve taken so much out of a person’s pay check at the end of the day and he/she has to go to the hospital but can’t get any decent healthcare, is it any wonder that they are angry that they don’t see their tax money at work? The same is true for education. Teachers salaries, classrooms, books. There is just no money in the basic needs of the community. Who needs a new basketball court every 15 feet when there is no school for the children to go to or no hospital for the sick?

This has been a hard year all around for taxes and the government and the people have lost faith in an institution that is supposed to protect them. Ever since the PDAF scandal broke, it has become even harder than ever before because while people suspected tax abuse and graft and corruption back in the day, now they are confronted with it right in front of their faces. While some can’t even put food on the table they see these government officials with 10 cars and massive parties all, allegedly funded by taxpayer’s money.

Not to mention, the apparent lack of justice for these crimes too. After all, it seems to be a vicious cycle when it comes to going after high-ranking criminals in the country. The scandal breaks, they nab the person responsible, then comes the farce of putting the person in jail – the back and forth of this jail and that jail. And then, once they have been in jail for a while trials commence with no real outcome. Just going back and forth and back and forth. And then, when enough time has passed it seems that everyone ends up sick and needing to go the hospital. We’ve seen it happen time and time again. And quite frankly, I think everyone is fed up and asking – is this farce what my taxes are funding?

At the end of the day, I’ve said it once and I’ll say it again. I don’t envy the job the BIR has to do when it comes to collecting taxes. I believe they are doing the best that they can and really working hard to fulfill their duties. However, it’s not surprising that they are met with resistance as well. It’s an uphill battle and I think it will continue to be harder in the months and years ahead unless major changes are made all around.