Kim’s ransom

IN THE past two weeks, the news media went crazy over one single measure in Congress, because both the Senate and the House of Representatives agreed that they had to change the 20-year-old income tax law in this country.

Yes, our lawmakers wanted to lower the income tax imposed by the government on millions of ordinary employees. Hoorah!

Based on the reports, Congress had one and only one compelling reason to lower the income tax on ordinary workers: It was only fair. It was thus the right thing for Congress to do.

Unfortunately the news also carried statements from the boys of our leader Benigno Simeon, aka BS, to the effect that the Aquino (Part II) administration opposed the measure.

In fact, the administration—through the valuable advice of the Department of Finance and the Bureau of Internal Revenue—held the tax legislation for ransom.

Sure, according to the administration, Congress could lower the income tax rates, as long it could meet some 16 conditions.

They would include an increase in the surcharge on oil products, or in the sales tax called VAT from 12 percent to 15 percent, or the removal of the bank deposit secrecy rule.

In other words, they were conditions that were close to impossible to meet. No hope for the tax reform then!

The boys of our leader BS would not let any chance to use the word “reform” in their propaganda line slip by. The main accomplishment of this administration was, well, “reform program.” The economy was doing well because of, well, “reforms.”

Never mind that this honest-to-goodness reform, the change in the income tax system, has been long overdue, because the lowering of the income tax rates should have been done every now and then, if only as an adjustment to the inflation over these years.

The Palace insisted, no tax reforms!

Years ago, Congress passed laws to impose the VAT, the 10-percent VAT at first and then the 12-percent VAT.

What Congress forgot to pass were the compensating laws that would, in exchange for the VAT, lower the income taxes on ordinary employees to, in effect, shift the tax system from income base to consumption base.

The Aquino (Part II) administration could not go along with Congress on the cut in income tax, unless Congress would give in to the demands of the DOF and the BIR, particularly the removal of the bank secrecy law.

Only in this country could a mere revenue collection agency and an executive department order around Congress.

To think, Congress was not even trying to do something obscenely immoral or wickedly evil.

Studies after studies showed that the 20-year-old income tax rates were no longer reasonable, because the timeworn rates put the burden of income taxation on ordinary employees.

Those were the guys from whom the government would automatically yank away hard-earned money, whether they like it or not, in the form of withholding taxes.

There were some 6.3 million employees who shouldered about 85 percent of the entire tax take of the government from individual taxpayers.

That group should be part of your “middle class”—our thin and continuously thinning middle class. Terrific!

In absolute amount, the yearly income tax payments of those poor struggling ordinary employees would amount to almost P340 billion—an amount that those millions could use to help send their kids to school or put more nutritious food on their tables.

And how much would the tax relief—the tax reform package that already gained support in Congress—give to them?

It would only be about P30 billion a year—or not even 10 percent of their total income tax payments to the wasteful graft-ridden pork-infested government that gave away P60 billion in dole-out last year.

In fact, as one bright senator who looked like Sen. Ralph Recto pointed out, this administration had asked for and obtained some P2.7-trillion budget for 2015, of which more than P500 billion was not obligated.

“Not obligated” was just another kind term for the controversial “lump sums” in the budget that the group of former Sen. Panfilo Lacson would like to call “new pork,” which would be something illegal and criminal also known as plunder.

The P500 billion in “new pork” would easily trump the P30 billion in tax relief to employees.

Based on statements from the Palace, the Aquino (Part II) administration was against the tax measure because it would be piecemeal legislation and it would be bad for the country.

Really? Since when did something fair and good for the citizens become bad for the country?

The latest statement from the Palace boys, quoting Revenue Commissioner Kim Henares, specified that the administration was “not against the lowering of the tax rates.”

Okay, then the administration was in favor of lowering the tax rates, was that it?

However, the Palace also released this statement: “The government remains firm on its stand on maintaining the present tax system. We reiterate that taxes are the lifeblood of the economy.”

That statement meant Congress could not touch the tax rates, right? Yet the Palace insisted that, as Kim said, the administration was “not” against the lowering of tax rates.

So what the f…k really was the stand of the administration on the tax relief issue?

Let me see—perhaps the BIR, as noted by our favorite Kim, was “not” against the cut in income tax rates; it was just that the BIR did not want Congress to pass the measure.

Put another way, the administration was just blocking the tax reform package in Congress, although the administration was “not” against it.

The DOF and the BIR insisted that the proponents of the tax relief measure simply failed to look at its overall effect on the country.

Boss, you would not have to look far, because the “overall effect” would be this: That millions of people and their families would get a little relief from oppressive taxation.

Let us remember that when the government pushed for the VAT, which was the sales tax system, it promised ordinary employees that the VAT would simply replace the high rates of income taxes.

And so the VAT law was the “condition” for the lowering of the income tax rates at that time some 20 years ago.

After 10 years in 2005, when the government again asked for a new VAT law, increasing the sales tax from 10 percent to 12 percent, and removing all the exemptions, it also promised that the improved VAT would bring about the lower income tax rates.

Guess what—after 20 years, after the government got the VAT, the main “condition” for the lowering of the income tax rates, and the income tax rates remained as oppressive as they had ever been.

In holding the tax reform package for ransom, the BIR laid down another the mother of all conditions: Congress would have to do away with the bank secrecy law.

Then and only then would it be possible for the administration to consider thinking of the proposal to lower the income taxes some time in the unforeseeable future.

Boss, perhaps it will not be too much to ask your boys to consider the whole point: Lowering the income tax rates was just fair!