Duterte said tax dues should be computed based on gross income, not on net income, claiming the method would prevent taxpayers from conspiring with corrupt revenue examiners.
Duterte: Change tax computation, eliminate Customs brokers
Alexis Romero (The Philippine Star) - September 12, 2019 - 12:00am

MANILA, Philippines — President Duterte has called for a shift in the way tax dues are computed and the elimination of Customs brokers to address corruption in government revenue agencies.

Duterte said tax dues should be computed based on gross income, not on net income, claiming the method would prevent taxpayers from conspiring with corrupt revenue examiners. He added that revenue examiners could understate tax dues in exchange for grease money.

“Let’s disregard the net (income)... We should go for the gross. The examiners will lose their jobs,” the President said in a press briefing at Malacañang on Tuesday.

“If we go for the net, there are exemptions... If we go for gross, there’s no need to determine that,” he added.

Gross income tax is assessed against the money that one earns and is applicable to income from a job and to funds that are set aside in an estate or trust. Net tax, on the other hand, is levied on production less subsidies received and is also paid to government less transfer payments, according to a Palace statement.

“What is corruption in gross (income tax)? Once the receipt is there, that will be your tax due. If you go for net, there will be deductions. The examiner comes in and says, ‘No, this can’t be.’ Now, the last deal is, ‘Let's make this five (million). Pay two (million). Give us three (million),’” Duterte said.

He urged the media to join him in “agitating” Congress to adopt the gross taxation.

The Chief Executive also claimed that there is corruption in Customs because of brokers.

“Itong sa Customs, ang gusto ko, wala nang brokers. Pagka may brokers, may corruption talaga ’yan (With regard to Customs, I want to get rid of brokers. If there are brokers, there is corruption),” he said.

“Take away the brokers and you would have cut corruption overnight. On a scale of one to 10, maybe, you have reduced corruption to about eight and one half,” he added. “That son of a b**** brokerage, remove it. Let’s just rent the warehouses.”

Duterte also wants agencies to cut the time needed to secure accreditation from the Customs collector.

“I will tell the Customs and the (Bureau of Internal Revenue), you only have about two days to act on it. More than that is corruption,” he said.

In a speech during the awarding of government officials also last Tuesday, Duterte asked the help of the Civil Service Commission in hiring honest people in the Bureau of Customs (BOC).

“It’s hard to find an honest man. If you have, ma’am chairperson of Civil (Service Commission Alicia Bala), if you have, please give me. I will really fire a lot of people,” he added.

Waiting for formal order

Despite Duterte’s pronouncements on doing away with brokers and collectors to address corruption at the BOC, an official of the bureau said they would still have to wait for the formal order of the President before implementing any measure.

Gen. Bienvenido Datuin of the BOC’s public information and assistance division said they could not easily implement any measure as far as removal of brokers and customs collectors is concerned without the “direct guidance” and the formal order from the President’s office.

“We still have to wait for the details and direct guidance from the President. We go by the details. We feel that the President has some other details there,” Datuin told The STAR when asked to comment on Duterte’s pronouncement on Tuesday.

Datuin, however, said the BOC is taking Duterte’s order “seriously.”

Unlike any other government agency that immediately implements any of Duterte’s pronouncements without a formal written order from him, Datuin emphasized that the BOC would first review all measures in line with the President’s efforts to cleanse the bureau.

“These things have to be reviewed along with the thrust of the BOC. But everything should be taken seriously,” Datuin said as he emphasized that they could not yet tell the possible effects of the possible removal of brokers and collectors in terms of their target revenue collection. – With Robertzon Ramirez

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