Tax 101

Having nearly flunked Math 101, I won’t presume to understand the intricacies of the tax reform package recently passed by the bicameral conference committee of Congress.

Being a taxpayer, however, I have some idea of the impact on my finances of some of the measures in the Tax Reform for Acceleration and Inclusion, or TRAIN.

Certain automobile dealers must be having a merry Christmas as people who can afford it are reportedly rushing to buy luxury cars before the new taxes on pricey imports hit the stratosphere. Since I can’t afford even the tires on a Mercedes Benz and I don’t have a single car in my name, this is not my concern.

How will TRAIN affect my bottom line? My take-home pay grows because the tax automatically withheld becomes smaller. I know that what I save in income tax, however, will go to higher prices of goods and services all around including electricity. Inflation is guaranteed when gas prices go up due to the increase in excise tax.

They could have moved the additional excise tax on fuel to cigarettes, but TRAIN critics are pointing to a powerful tobacco lobby that made this impossible.

Once TRAIN goes into effect, we have to read the fine print in every bill we receive, because there will surely be higher value-added tax at every layer. Just check out your monthly utility bills to see what I mean.

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Groups advocating good governance and fighting corruption should include an information campaign on Tax 101. Many Filipinos are still not aware that everyone in this country is a taxpayer, thanks to VAT, which gives everyone the right – and the civic duty – to demand good governance and the judicious use of public funds.

There are still a lot of people who think that if they don’t pay income tax, they are not taxpayers and the government does not owe them proper service. People unaware of how much the government takes from them in the form of VAT have a high tolerance for corruption and abuse of power, thinking that it’s not their money that’s being stolen or wasted anyway.

Such people may even be glad to get a share of the proceeds of corruption. They ask no questions when the crooked mayor or barangay captain uses public money like personal funds to contribute to the so-called “KBL” – kasal, binyag, libing (weddings, baptisms, funerals) – in the community. They feel no outrage when the epals put their names or faces on billboards to claim credit for roads, schools and other development projects.

If people are unaware that the government gets a cut each time they switch on the lights or consume water at home or puff on a cigarette or take Decolgen or Diatabs, they won’t care if a government official goes on a junket with his staff or relatives in tow, all at public expense.

They may not be outraged if akyat-bahay burglars prowl their neighborhoods and they must walk past poorly lit streets where snatchers lurk, ready to kill for a cell phone, while public officials, their spouses, mistresses and children enjoy police bodyguards around the clock. What did these people do to deserve special police protection?

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In advanced economies where ordinary people are aware of their rights and responsibilities as taxpayers, there is a heightened sense of outrage against the misuse of public funds or resources for private purposes.

Yesterday at around 1:30 p.m. along the Alabang-Zapote Road, for example, traffic aides wearing the orange uniform of the Las Piñas government stopped the busy Christmas rush traffic so a hearse of Royalty funeral homes, backed by official vehicles of a barangay, could pass, ahead of everyone else. When the hearse had passed, the traffic aides disappeared. If this happened in certain other countries, an entire traffic unit could be sacked and the barangay personnel indicted for misuse of official vehicles.

Over the years, many foreign diplomats have expressed to me their amazement – and that of their governments – at the large contingents that accompany Philippine presidents overseas, even during trips where the host country is footing the bill only for a few members of the visiting delegation. The officials travel not only with almost their entire Cabinet and the leadership of the two chambers of Congress in tow, but also with their personal hairdressers and gardeners.

Foreign junkets have become part of patronage dispensed at taxpayers’ expense by Philippine public officials.

President Duterte recently fired urban poor commissioners ostensibly for foreign junkets. He should go one step further and put an end to the foreign junkets even of his political allies.

And he might want to set an example by traveling overseas with a lean entourage, instead of taking with him even private individuals who supported his presidential bid. Even if they travel with him on a chartered flight presumably for free, taxpayers pay for the foreign accommodations – and these people are unlikely to stay in any hotel lower than four stars. That will be an average minimum of $250 a night per person.

Foreign diplomats have told me that such junkets in their countries could end political careers, and even lead to criminal indictments for misuse of public funds.

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There are many Filipinos aware of the tax structure and are outraged when they see public funds and resources being used for personal purposes by government officials. The outrage against entitlements claimed by public officials made former president Noynoy Aquino’s ban on wang-wang hugely popular.

Social media has allowed people to highlight government officials’ abuses or express suspicions of wrongdoing. Motorists at the SLEX, for example, have noticed the unusual number of government ambulances from Southern Tagalog / Calabarzon, sirens blaring and blinkers on and back-up vehicles in tow, speeding through the expressway at regular hours during working days. They suspect that those in the convoys are politicians circumventing the wang-wang ban.

But many more Filipinos lack that awareness of what taxpayers deserve. If President Duterte wants public vigilance in his avowed fight against corruption, he should launch a campaign to improve taxpayer awareness alongside TRAIN, so that people will demand better public services and honest governance.