Thursday, April 28, 2016

Give to Caesar what is due to Caesar

The upcoming national and local elections remind us to exercise our right of suffrage, or the right to elect officials who will best serve the country. It is not only a right but also a responsibility that is entrusted to every eligible citizen in the country. However, as responsible citizens, we should also pay our share of taxes.

This year, the theme of the Bureau of Internal Revenue’s (BIR) Large Taxpayers Service (LTS) is the “Power of Possibilities”, as it tries to achieve a collection target of P1.3 trillion, or roughly 65% of the BIR’s total revenue target of about P2.1 trillion.

Achieving a goal that exceeds by 47% the actual collections last year appears to be more like wishful thinking on the part of the LTS. The same dilemma shadows the Bureau as a whole, which is also tasked to exceed by more than 40% of last year’s collections. In fact, the BIR’s assigned goal this year is so overwhelming that the BIR Commissioner was quoted as saying that the P2.1-trillion target is unrealistic and unattainable.

To be fair, the BIR has so far been very successful in its mandate as reflected in its unprecedented collection performance (i.e., collection for 2015 has doubled compared to the P457.32B in 2010). Such success may have been due to the BIR’s approach of scaring taxpayers to pay the correct taxes and shaming those who do not. Improvement in tax compliance also appears to have trickled down to the ordinary citizen as manifested in more buyers demanding invoices/official receipts and more sellers (even small ones) willingly issuing them, even if not asked. This is a welcome sight because the issuance of duly registered invoices/receipts helps ensure proper declaration of income by the sellers.

To realize the LTS goal this year, the LTS Assistant Commissioner proposes the following initiatives: 1) expansion of the tax base (i.e., more taxpayers under the LTS); 2) creation of a 2nd tier LTS of high net worth individuals; 3) use of technology (e.g., enhancement of the electronic filing and payment system); and 4) hiring of more revenue officers.

The BIR has also been issuing various directives to plug loopholes in the system and encourage compliance. Mandating electronic filing of tax returns and allowing tax payments through credit and debit cards are also welcome developments for taxpayers. 

However, the BIR does not always have its way as some of its previous directives were stopped by the courts through the issuance of Temporary Restraining Orders (TROs) or decisions rendering the directives as invalid.

As reported in the news, the Inter-agency Development Budget Coordination Committee had remarked that the various TROs issued by the Supreme Court (SC) have hindered government’s fight against tax evaders.

For example, in 2014, the SC ruled in favor of lawyers, doctors, and accountants by issuing a TRO against the implementation of Revenue Regulation (RR) 4-2014 or the “Guidelines and Policies for Monitoring of Services Fees of Professionals.” The RR requires all self-employed professionals to submit an affidavit indicating the rates, manner of billings, and the factors they consider in determining their service fees, upon registration and every year thereafter on or before Jan. 31. 

Likewise, the SC has indefinitely stopped the implementation of RR No. 1-2014 and Revenue Memorandum Circular No. 5-2014 with a TRO issued on 9 September 2014. These issuances require agents to submit the alphalist of payees on income payments subject to creditable and final withholding taxes and prohibit the lumping of various payees into a single amount or line item. The SC’s TRO came after six business groups lodged a petition questioning the validity of said issuances and asking the high court to declare the orders void and unconstitutional.

Given BIR’s tall order of meeting its collection target, we can only empathize with its challenge of generating the much needed funds for public expenditure. On the other hand, from the perspective of taxpayers, the BIR’s implementation of tax laws should be fair, just and equitable. According to the Supreme Court, this is so, lest the tax collector kill the goose that lays the golden egg. 

Thus, while “taxes are the lifeblood of the government,” the power to tax has its limits. For this is how the mechanism of democracy grinds to establish a well-oiled system of checks and balances. As the taxpayer has every right to question the validity of any revenue issuance, the BIR also stands to benefit by laying to rest all issues arising from the challenge of its directive and quelling all hindering factors for its implementation. 

In any case, all three branches of the government must support the fiscal efforts of the BIR. In the judiciary, parties stand to benefit when courts act expeditiously in resolving disputes and matters involving revenue issuances. A delayed court decision is detrimental not only to the BIR but also to taxpayers, especially those whose business activities may be suspended or may inconveniently suffer from losses in productivity and entail substantial costs while the appeal remains pending.

Congress should also do its share by passing tax laws that are simpler and easier to implement. Congress should also pass laws that would insulate the BIR from politicians and then make the compensation/benefits of its tax officers at par or even higher than the private sector. These will not only curb corruption but also attract the best and the brightest to the BIR, which will ultimately lead to a more efficient tax administration.

The executive department must also spend wisely, frugally and stamp out corruption, so more citizens will be benefitted and encouraged to correctly pay their taxes. 

One hopes that more Filipinos pay their taxes correctly as this will translate to more voices demanding better services from the government and heightened vigilance in government affairs, including choosing the right leaders.

As in the oft-quoted proverbial verse, “Give back to Caesar, what is Caesar’s...” citizens have the obligation to contribute to public expenses. Like Roman taxes, the BIR’s issuances and collection efforts are needed to carry out much-needed government spending, relieve national debt and establish a financially stable government. If we intend to attain economic sustainability, let us heed the call for social responsibility. 

Please pay your taxes and vote wisely this May!

The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.

Carlos R. Mateo is a director at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
(02) 845-2728
carlos.mateo@ph.pwc.com


source:  Businessworld

No comments:

Post a Comment