Tax payment ordeal
Ahead of the April 15 deadline for the filing of individual income tax returns, the Bureau of Internal Revenue has come out with print and TV advertisements encouraging the citizens to pay the correct taxes.
The action is part of the “Angat Pa, Pinas!” tax campaign it launched last month to make Filipinos look at tax payment “as an opportunity to help the poor and develop the country to make it economically viable and strong.”
This year’s media blitz has a positive and nationalistic tone. The TV advertisements show people putting concrete blocks to construct a bridge and a hospital.
This approach is in sharp contrast to last year’s “shame campaign” where the BIR made it appear doctors, accountants and lawyers piggy-backed on the taxes paid by low salaried public school teachers.
It did not come as a surprise that the tax cheat tag riled the professionals concerned, especially the doctors. They decried the BIR’s publicity stunt as unfair and erroneous.
The unorthodox strategy and sharp reaction to the advertisements fanned public discussion of the lopsided nature of our tax system.
As a result, the professionals’ organizations met with the BIR to discuss the manner by which their members can comply with their tax obligations.
National budget
The BIR has a tough collection target this year. The 2015 national budget requires more or less P2.6 trillion in revenue to accomplish its projects.
Some P1.7 trillion, or 73.6 percent, of those revenues are assigned to the BIR to collect. Of this amount, P1.03 trillion (or 60 percent) are expected to come from income taxes, P372.4 billion from sales taxes and the rest from other taxes.
The April 15 tax collection is considered the barometer of the BIR’s ability to meet its annual targets. If the tax take is substantial, there is less pressure to intensify collection efforts; otherwise, the BIR would have to look for other sources to make up for the expected shortfall.
Convincing taxpayers to pay their taxes is not easy. Whenever possible, taxpayers will take advantage of the loopholes in the tax laws to avoid [which is legal] or evade [which is illegal] the payment of taxes.
For most Filipinos, money paid as taxes is money that could otherwise pay for the basic necessities or pleasures of life.
So in April, the services of lawyers or accountants who know how to game the tax system are in demand.
Preparation
The desire to be patriotic in the payment of taxes further loses its appeal amid reports of lawmakers diverting billions of pesos in public funds to their pockets, or government officials treating their budgets as piggy banks to maintain their lavish lifestyles.
As if the lack of motivation to pay taxes is not bad enough, bureaucratic procedures and practices make the filing of tax returns and payment of taxes unpleasant activities.
This annual ritual is akin to paying your dentist a visit to undergo a root canal, or going to the school principal’s office to discuss your child’s misbehavior in class. You don’t look forward to them.
The unease starts with the preparation of the applicable tax return depending on the source of income: Form No. 1700 for purely compensation income and Form No. 1701 for self-employed and professional individuals.
The logical source of these forms, other than a BIR office, is its official website. But when you go to its website, Form 1700 is not in the list of downloadable forms, and the Form 1701 available on line is circa July 1999.
That form has long been replaced by a June 2013 version. If you want to download the latter you have to “google” it or go to the website of accounting firms that make it available to the public.
For a government office that is reputed to have the most sophisticated computer system in the bureaucracy, these omissions are difficult to explain.
Complicated
Until some BIR tax form designers felt there was no beauty in simplicity, individual income tax returns in the past consisted only of two or three pages, depending on the nature of the income to be reported.
Today, Form 1700 has four pages. Since the data requested are in the supporting documents prepared by the taxpayer’s employer, filling it up is a breeze with basic arithmetic skills.
Not so with Form 1701 which consists of 12 pages and over 200 line items that, where applicable, have to be filled up by the taxpayer concerned.
The first four pages alone of this form have 163 line items and the rest of the pages have an average of 10 line items each to answer.
Although its size can be reduced to a regular bond paper, the limited space would make it difficult for the taxpayer to fill in the blanks by hand, unless he has the hands of a 10-year-old child.
The alternative is to complete the form digitally, or by using the form made available through the computer. Too bad if the taxpayer is not computer savvy.
That’s the easy part. The real challenge is figuring out exactly what numbers are asked in the line items and how they relate to each other in the computation of the tax liability, if any.
With some line items making cross references elsewhere in other pages of the form, the taxpayer would find himself in a maze with the requested figures.
To make sure the tax return is properly done, the conscientious [or to use the words of the BIR, patriotic] taxpayer would have to consult or engage the services of an accountant to help fill out Form 1701.
If the objective of Form 1701 is to give accountants a living during the tax filing period or confuse the taxpayer into committing mistakes to justify the imposition of fines and penalties, it has accomplished it.
The BIR’s campaign to make taxpayers pay the correct taxes would be more effective if it made the process user friendly or easier to comply with.
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