The taxpayer’s lament
It’s really heartbreaking to be a taxpayer these days. Seriously.
About two months ago, I went to a meeting with a friend, and found him sitting glumly at his desk. What was wrong? I asked, noting his long face. He was thinking, he told me, about the many BIR requirements that were taking up quite a bit of time and effort on the part of his company. “What’s going on, Anton?” he asked, “First it was the receipts, and now it’s something … does the BIR have any idea what they’re doing to us medium-scale businesses?”
My friend’s mournful question —a “cri de coeur” that was as much a lament of the intellect as it was of the spirit—has been echoing in my ears over the past few weeks, and it’s not just because I was really struck at how stressed out he was when he said it. It’s because I’ve been hearing the same thing over and over, from other clients, from my fellow tax practitioners, and from friends who are professionals, self-employed or entrepreneurs themselves, for the past few months now—not weeks, not days, but months. It is a lament that finds its foundations in the many new requirements that the BIR has been imposing on various sectors of the taxpaying public over the past couple of years—requirements that are proving to be very difficult to comply with, and which have effectively made it even more challenging to do business in the Philippines.
Don’t anyone get me wrong. I will always be the first to urge my clients—and indeed, every taxpayer, for that matter—to comply with BIR requirements. I’ve always been of the belief that it’s far easier—and definitely far more ethical—to comply than to hunt for loopholes in the system, particularly for businessmen and entrepreneurs. The last thing that any taxpayer would want is to live each day of his life looking over his shoulder, wary that at any moment, he’ll be subjected to an audit and be exposed as a tax evader. That is a recipe for disaster.
This is not to say, though, that I don’t feel my clients’ distress when the myriad requirements that are now being thrust upon them are proving to be more onerous with each passing day. Three or four years ago, it was already a challenge to do business in the Philippines. Today, it’s becoming a downright ordeal. Large corporations, with their resources and their extensive pool of skills and expertise, can cope with these new requirements, but the small and medium-scale businesses have been laboring under them with little hope of relief in sight.
And barely have they been able to readjust or amend their financial policies to comply with a particular pronouncement, and then here comes another requirement with an even tighter deadline than the last, and an even stiffer fine to pay if one can’t meet it.
The way things have been going in the past couple of years, one might be forgiven for wondering why the Government seems to be bent on making life difficult for the taxpaying public. We all know that every citizen (human or juridical) has the duty to pay taxes, but where, I wonder, is it written in the Tax Code that he should have to go to such difficulty to do so? I must also admit to being rather disquieted at the preponderance of data requirements, as if the BIR—and thus the Government—were afraid that every taxpayer is out to conceal information. An atmosphere of mistrust does not make for a favorable business climate, and no taxpayer wants to operate under a cloud of suspicion that he will resort to tax avoidance or tax evasion at the drop of a hat. The tension in the business community is palpable, and I have heard of a number of SMEs that may end up closing shop—and cutting their losses—rather than run themselves into the ground trying to comply with all those tax requirements. What that will do to the thousands of people they employ is something I don’t even want to think about.
And then the pork barrel scandal hit.
For a people who had become, in a certain sense, resigned to the presence of corruption in virtually every area of governance, the news that over three short years—the years whose expenditures, so far, had already been examined by the Commission on Audit—billions in taxpayers’ funds had been siphoned from the state coffers and pocketed by a single individual, was scandalous evidence of greed the likes of which we had not seen for a generation. And at a time when taxpayers—particularly the salaried employees, the self-employed, professionals and small- to medium-scale enterprises—have been toiling under an ever-increasing array of requirements, the awful truth that a considerable portion of the tax payments we have made ended up lining someone else’s pockets hit with all the terrible strength of a Force-10 gale.
There was a time when taxes were seen as a symbol of subjugation, and were, in fact, often perceived—not without reason—as instruments of harassment. Since Biblical times, tax collectors were seen as agents of oppression, out to squeeze every last coin from a beleaguered population. The rise of the democratic states, however, transformed taxation into the means through which a person could contribute to the economic development of his country, and the aggregate wealth of a nation would ultimately serve the best interests of the nation. Taxation came to be seen as an “investment” in the national economy, and the taxpayer, from being the “milking cow” of feudal lords, became a participant and a stakeholder in a country’s push for economic growth. Over the past century, taxation became synonymous with involvement in national development and the delivery of public services, and for the first time in its long and oftentimes unhappy history, taxation took on a more populist—and a more palatable—face.
As someone who has been involved in taxation for more than two decades, I can say that I am grateful to be a witness—and yes, in some ways a participant—to the coming-of-age of Philippine taxation. I am thankful that I am a part of a sea change in our overall appreciation of taxation, of a gradual paradigm shift that has seen the Government acknowledge the role—and the sacrifice— of taxpayers through an increasing focus on taxpayer services and on efforts to ease the tax compliance burden. I know that many taxpayers are themselves profoundly appreciative of this development.
The past year or so, however, has given me reason to wonder whether the advancements of the past decade may yet be reversed, and the past few weeks have made me worry that paying taxes may once more be seen as a real burden by the public.
The pork barrel scam, however, may yet be the straw that breaks the long-suffering camel’s back.
Whichever way you look at it, the taxpayer—having seen how his taxes were siphoned off by the billions into fake projects—will begin to question why he should go to all the trouble of complying with a host of increasingly cumbersome requirements on top of paying his taxes (to say nothing of being viewed as a potential tax evader) when he can’t even be sure whether those same taxes will literally end up in the bathtub (if some stories are true) of yet another unscrupulous individual, while elected and appointed officials charged with the judicious expenditure of public funds are apparently turning a blind eye to the rip-offs happening right under their very noses. Why pay taxes, a taxpayer may ask, when they’ll be stolen by someone anyway?
Even the threat of tax evasion charges may yet prove to be a paper tiger in the face of a scam whose magnitude and brazenness are almost beyond words, and which is, in a certain sense, worse than the most audacious tax evasion scheme, for the simple yet telling reason that the scam may well have been perpetrated in collusion with some of the highest elected or appointed officials in the land.
Here’s a thought that the Government might want to consider.
Gone are the days of the feudal lords when the people were meek lambs who paid levies simply because they were ordered to do so. The march of civilization—and the resulting advancements in education and technology—have made the public a far more enlightened, and yes, far more empowered people, who will pay their taxes but who also want to know where their taxes will be spent, and who want to be assured that the taxes they paid will be safe from misappropriation by anyone. They know what their duties are, but they also know that they have rights, and a people who see that their rights are being flouted can be expected to raise their voices in protest, and to make their grievances known in any other way that they believe will be heard—and felt—by the Government.
For now, those voices are raised in dismay, and the public waits to see if and when anyone will be prosecuted for the pork barrel scandal, and wait they will, because too many scandals have already gone unpunished.
(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is a Senior Partner of The Tax Offices of Romero, Aguilar & Associates and member of the MAP National Issues Committee and the MAP Tax Committee. Feedback at <map@[email protected]> and <[email protected]>. For previous articles, please visit <map.org.ph>)
