Fixing the tax system
How do we fix our tax system when taxpayers are in cahoots with tax collectors?
Not paying the right taxes is wrong. Bribing examiners makes it even worse.
But hiring professional fixers like accountants and lawyers to negotiate tax assessments with examiners makes it a hopeless situation.
Instead of paying the right taxes, we bribe examiners to avoid the huge assessment of deficiency taxes.
The problem is a lot of us, if not all, are compromising or willing to compromise. We cannot fix the system if we just keep on blaming the government.
The question is not whether all examiners are corrupt, but are we really willing to pay the right taxes?
The Bureau of Internal Revenue (BIR) cannot collect the right taxes if we will not cooperate. We have to do our share e.g., asking for an official receipt and filing our tax returns on time.
Unfortunately, corruption in BIR is already embedded in our tax system and in doing business in the Philippines.
It will not disappear overnight despite the appointment of our good Commissioner, Billy Dulay.
Given the very low salary of BIR examiners who have unjustly relied on bribe money, it becomes normal for some of them to compromise their tax assessment if the price is right.
This defeats the purpose of the BIR audit, resulting in more tax leaks or revenue losses, than collections.
Unfortunately, nobody will complain as taxpayers benefit as well in the compromise agreement.
A typical assessment of P100 million can be compromised by simply bribing an BIR examiner with at least P1 million (which must be higher than previous year) where only P100,000 will be remitted to the government as deficiency tax payment.
Imagine the millions or even billions of taxes compromised every year due to the corrupt and inefficient tax system.
But don’t think the bad BIR examiners are very rich, as they need to remit at least 50 percent of the bribe money to the Revenue District Officer (RDO), 20 percent to the Group Supervisor (GS) and only 30 percent will remain with them.
It seems our unscrupulous BIR examiners are not afraid of President Duterte.
A lot of them continued to harass taxpayers to compromise their ridiculously huge tax assessment last Christmas season.
Is there still hope?
I have very high hopes with the good and honest leadership of Commissioner Dulay who immediately acted on a lot of complaints and issues raised by taxpayers from various business groups and industries.
In fact, his priority programs for 2017 clearly reflect the principal objectives of BIR to attain collection targets, improve taxpayer satisfaction and protect revenues and recapture public trust.
These include comprehensive taxpayer profiling and industry benchmarking, review of revenue issuances, simplification of tax forms, enhancement of electronic registration system, in-house enhancement of Electronic Certificate Authorizing Registration (eCAR) and revalidation/audit of tax assessments.
We need to promote tax education and administration reform within the bureaucracy to support the comprehensive tax reform package of the Department of Finance.
We need to trust and support Commissioner Dulay so he can reduce, if not eradicate, corruption in the revenue service.
Tax policy reforms will never be enough. It has to be supported by an efficient tax administration which upholds honesty and integrity among all tax collectors and taxpayers.
But first, the Duterte administration must declare tax amnesty to start fresh and collect taxes from previous years without compromises.
