EDITORIAL - Micro entrepreneurship in a pandemic

With people confined to their homes due to the pandemic, online transactions have surged. Along with this phenomenon, complaints have mounted about products or services not delivered, goods that don’t match what was advertised and paid for, and outright scams. Most of the online transactions are outside the radar of the tax police and business regulatory agencies.

Now the Bureau of Internal Revenue wants to address one aspect of the deficiency and collect the proper taxes as businesses migrate to online sales and home deliveries. In a circular dated June 1, the BIR ordered all online businesses to register and pay the appropriate taxes.

Quality control in goods and services procured online may have to wait until the passage of a law on e-commerce. The tax collection, however, can already start for registered brick-and-mortar businesses that have resorted to online transactions amid quarantine measures. Electronic commerce is expected to become part of the new normal even if all quarantines are lifted, so the government believes regulation is needed. With most businesses shuttered or downscaled and funds running out for social amelioration amid the lockdowns, the government also badly needs revenue sources.

Many online businesses, however, are micro enterprises that can use government support especially as the economy contracts due to the pandemic. A significant number of these businesses started only during the community quarantine as the owners lost their jobs or other livelihood sources. Instead of being burdened with bureaucratic red tape, government fees and taxes, these micro enterprises can even use support to grow their business, in terms of access to financing, marketing, technological knowhow and skills training for workers.

At the same time, however, the government must also protect consumers and address complaints of overpricing and fraud in e-commerce. Cyber space is a boon to scammers and other crooks. How to go after them while broadening the revenue base without strangling the informal economy is another delicate balancing act amid the ruinous pandemic.