Death and taxes

The estate tax is levied for the privilege of transferring the covered assets of a deceased person to the heirs.

This is one of the things I have learned in my crash course on Taxation 101, after President Duterte himself asked aloud, in his most recent stream-of-consciousness briefing, why the Bureau of Internal Revenue (BIR) is not collecting the estate tax.

Duterte did not mention any names. But because the only prominent estate tax case at this time involves the billions that the BIR has been trying to collect for over two decades now (with the latest formal demand sent by the bureau on Dec. 2 last year) from the heirs of dictator Ferdinand Marcos, people inevitably believed the President’s remark was aimed at the administrator of the late dictator’s estate, his only son and namesake Ferdinand “Bongbong” Jr.

Finance Secretary Carlos Dominguez reiterated that the BIR has been trying to collect the estate tax, originally set at P23 billion, from the Marcoses, but the family argues that the assets in question are still under litigation, amid continuing efforts of the Philippine government to recover ill-gotten wealth.

This issue had been settled by the Supreme Court (SC) in a 1997 ruling on the estate tax case, saying it was “at a loss as to how these cases are relevant to the matter at issue.”

“The mere fact that the decedent has pending cases involving ill-gotten wealth does not affect the enforcement of tax assessments over the properties indubitably included in his estate,” the SC ruled.

The SC ruling became final and executory on March 9, 1999, as confirmed by the Department of Finance, which has supervision over the BIR. The amount reportedly ballooned to an estimated P203 billion because of surcharges, interest and related fees.

Despite that clear-cut ruling, successive administrations, including that of Noynoy Aquino, failed to enforce the SC ruling, or to file tax-related criminal charges.

Certain quarters have bewailed this act of omission by the government. They cite people they know, who couldn’t even focus on grieving properly for their dearly departed because the tax police kept breathing down their neck. Some ended up losing the assets in question because of their failure to settle the estate tax in time.

Meanwhile, here we are, children of a lesser God, with the Duterte administration refusing to suspend even one percent of the 12 percent value-added tax and additional excise taxes on petroleum products as fuel prices surge.

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My crash course on Taxation 101 actually started last year, as death stalked me amid the killer pandemic and I began seriously contemplating my mortality.

That was when I learned that under Republic Act 10963 or Tax Reform for Acceleration and Inclusion law, the estate tax that used to range from five to 20 percent under RA 8424 or National Internal Revenue Code of 1997 had been simplified to a flat six percent of the net estate. The TRAIN law went into force on Jan. 1, 2018. I don’t think it is being retroactively applied to the Marcos tax case.

Ordinary folks would have quickly faced criminal charges for tax offenses for failure to settle an estate tax ASAP. And the bar for compliance should be higher for government officials.

The website of a law firm points out that under current laws, once the net estate tax has been computed, the heirs, executor or administrator must file under oath the estate tax return within one year from the death of the decedent. An extension of no more than 30 days is allowed for valid reasons.

The estate tax must be paid when the return is filed. If payment would impose undue hardship upon the estate or the heirs, an extension for payment is allowed, up to five years if the case is settled through courts, and two years if settled extrajudicially.

But these rules are only for lesser mortals. Those who are more equal than others can get away with non-payment, and even run for president. And they might win.

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DRIVER EDUCATION: This week I renewed my driver’s license. It’s good for 10 years, even if pandemic restrictions slightly delayed the renewal.

The urine test for possible substance abuse has been scrapped, but the medical exam is still there. Cost: P600. The renewal fee itself is P500.

It took me about an hour, including waiting, to get the license. I have to return next week though for the actual license card because they said the machine for printing the card was down.

What took a long time was the renewal exam – a new feature in getting a driver’s license.

Having read complaints that it took some drivers up to eight hours to finish the exam, I checked out the Land Transportation Office website for information before taking the test online. The LTO objective is clearly to educate motorists about courteous, defensive driving.

It’s a laudable objective, but I can understand the complaints. There’s a three-part video, available in English or Filipino, covering the entire gamut of rules and laws on driving cars and motorcycles (for non-professional license).

The video set seems to run forever; I simply skimmed through much of it. It must be even more grueling for those who can’t take the test online.

And despite best efforts, the typical driver will likely forget the maximum height requirement (in centimeters) for children to be strapped to a special seat in the back of the car, or the minimum age for kids to be allowed to sit in front – two of 25 randomly selected questions in the exam that I took.

I was elated to pass the test with a score of 88 (passing is 50). But I wonder why I had to answer questions about motorcycle driving when I don’t even know how to ride a bicycle. (Sample question: what do you call that thingy for delivery items on the back of the motorbike?) Shouldn’t there be a different exam for motorcycle drivers? Driver education is laudable, but the program can use fine-tuning.