Before the year ends, President Duterte is expected to sign into law a new tax amnesty bill.
The two chambers of Congress recently approved on third reading their respective versions of a bill granting amnesty to unpaid internal revenue taxes, estate taxes and other tax delinquencies in 2017 and previous years.
The measure aims to accomplish two objectives: First, to raise at least P36 billion to help fund the administration’s infrastructure program, and, second, to allow erring taxpayers to have a clean slate in their tax obligations to the government.
Tax amnesties were granted in the past for the same reasons. Ten tax amnesty laws were enacted during President Ferdinand Marcos’ time, while Presidents Corazon Aquino and Gloria Macapagal-Arroyo had five and two, respectively.
The administrations of Presidents Fidel Ramos, Joseph Estrada and Benigno Aquino III did not have tax amnesty laws.
Records of the Bureau of Internal Revenue (BIR) show the government raised P10.01 billion from tax amnesties granted from 1972 to 2008.
Whenever a tax amnesty law is enacted, the government assumes (and hopes) the affected taxpayers will be motivated to avail of it in a genuine desire to help raise additional revenues, and that they will submit accurate information about their personal and business activities subject to the tax amnesty.
And, most importantly, after their obligations are satisfied, the once errant taxpayers will turn a new leaf and, from then on, promptly pay the right taxes. In other words, they will transform into law abiding citizens.
On the part of the government, the data gathered from the amnesty program will enable the BIR to plug the loopholes in its collection efforts and, when circumstances justify it, strengthen the prosecution of tax evaders.
The fact that another tax amnesty law will be enacted shows the past programs failed to live up to expectations of higher tax compliance and more efficient tax collection by the BIR.
Although the gains from previous tax amnesty programs were laudable, they were short- lived. After the initial windfall, it was back to square one.
The amnestied taxpayers took advantage of the inefficiencies of the revenue collection process and the vulnerability to corruption of tax collectors.
The collection system reverted to the same situation it was in prior to the tax amnesty. The facts and figures collated from the program were hardly, if at all, used to streamline the process and discourage potential tax dodgers from gaming the system.
Sadly, tax amnesty is demoralizing to Filipinos who consciously and faithfully comply with their obligations because they believe it is the right thing to do or they do not want to risk prosecution for tax evasion.
But for tax cheats, tax amnesty is a boon. For them, it’s proof sometimes “crime pays.” They don’t have to lose sleep about going to jail for tax evasion as long as they do not do anything that may catch the BIR’s attention.
They can go under the radar and wait for a tax amnesty program. When that happens, they can quickly avail of it, enjoy its benefits, and be hailed for sharing their profits (or shall we say, loot) with the government.
Except for some cosmetic items, the provisions of the upcoming tax amnesty law do not appear to be different from the 17 earlier amnesty laws.
Although the BIR has expanded its manpower complement and upgraded its data gathering facilities, the more significant element of an effective collection system—the integrity of the staff— remains a big question mark.
No harm in trying, but the new tax amnesty law may accomplish its objectives. After all, miracles still happen.