Revenge of the taxpayers

Judging from the tax collections last April, it looks like the name-and-shame campaign of the Bureau of Internal Revenue (BIR) failed to accomplish its objective.

The BIR was able to collect from companies and individual taxpayers, including professionals, only P156.1 billion, way short of its target for the month of P176.51 billion.

Although the tax take is higher by 7 percent for the same month last year, it is considered the slowest growth for any month so far this year.

Revenue Commissioner Kim Jacinto Henares blames the shortfall on the fiscal incentives enjoyed by large taxpayer companies and the increase in deductions for contributions to charitable institutions in the wake of the natural calamities that recently hit the country.

To make up for the drop in revenues, she said the BIR would intensify its audit of the books of taxpayers that paid less taxes for fiscal year 2013 despite posting higher revenues for the same period.

She also called on Congress to facilitate the approval of the Fiscal Incentive Rationalization Bill that would reduce the tax perks that some companies enjoy under existing laws.

Tax holiday

Henares was not being forthright when she partly blamed tax incentives for this year’s low tax collection. Those privileges have been in place and enjoyed by their beneficiaries for years, not just last year.

She was well aware the BIR would have to forego, for this year and the coming years until Congress acts on that bill, the collection of sizeable sums of money that those tax perks represent.

Was she expecting their beneficiaries not to avail of the tax privileges and instead opt to pay additional taxes? Wishful thinking.

It may be true that donations to charity increased last year because of the over-the-quota calamities we went through, but it is doubtful if the dole outs were of such magnitude as to substantially reduce revenue collections.

Since the BIR did not disclose how much in donations the companies deducted from their income as to substantially affect their tax payments, the veracity of this claim cannot be verified.

So what accounts for the unimpressive tax collections this year in spite of the BIR’s media blitz for taxpayers, especially, the professionals, to pay the right amount of taxes?

Did its name-and-shame campaign backfire or turn off, rather than encourage, the taxpayers to do their share in helping the government meet its financial obligations?

Disincentive

Until the pork barrel scam allegedly masterminded by Janet Lim Napoles unraveled in July last year, the BIR’s tax collections during the preceding years grew steadily.

As the economy improved under the present administration, so did the revenue collections. On some months, the BIR even exceeded its collection target.

Then came the July bombshell of the Inquirer that exposed the multibillion peso swindle of the people’s money allocated to the Priority Development Assistance Fund (or pork barrel) of “representathieves” and “senatongs.”

The country was shocked by the brazen way corrupt legislators, officials of the Department of Budget and Management, and personnel of government implementing agencies conspired with each other, using bogus NGOs as conduits, to pocket the money that was meant to improve the lives of the less fortunate members of our society.

The plunder made otherwise law abiding taxpayers to question the wisdom of accurately declaring their earnings, paying the right amount of taxes or even paying taxes at all.

Avoidance

What’s the point of paying taxes if they will only wind up in the bank accounts of greedy legislators, government officials and their cohorts?

The taxpayers’ disgust with the misappropriation of their money was (and continues to be) exacerbated by reports that essential government services, such as, education, hospitals and security, cannot be satisfactorily performed due to lack of funds.

Under these circumstances, what can a taxpayer who feels cheated of his hard-earned money do to get even with the thieves in government?

If you are a fixed income earner, you’re limited to joining mass demonstrations against those rascals.

You cannot evade the payment of income taxes because they are withheld at source or remitted to the BIR even before you get your salary.

If you are an entrepreneur or professional, you can legally reduce the amount of taxes the lawmakers can play around with by, among others, availing of available tax privileges, claiming allowable deductions to their full extent, and deferring the treatment of income in the books.

For corporations that share a similar feeling of the taxes they pay being used to fund the lavish lifestyle of the crooks in government, there are several ways of “skinning the cat,” so to speak, depending on the nature of the businesses they are engaged in.

There is no dearth in astute accountants or tax lawyers who know the permissible means of avoiding taxes or the gray areas in the Tax Code that can justify the reduction of taxable income.

The taxpayers who have taken this course of action, adverse as it may be to the government’s revenue position, did not violate the law. They cannot be faulted for expressing their anger over the misuse of their money by making less of it available to those who have a disposition for kleptomania of public funds.

That’s the only form of revenge available to them.

To pay or not to pay the right taxes? That’s the question many taxpayers will ask themselves every tax season until they have reasonable assurance that their money will be used for legitimate purposes.

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