Tax watch on self-employed traders tightened

The Department of Finance hopes to shore up the collection of income taxes by tightening its audit of self-employed businessmen.

According to Finance Secretary Cesar Purisima, self-employed individuals tend to underdeclare their income, resulting in a significant loss of revenue.

Purisima said the Bureau of Internal Revenue, an attached agency of the DOF, last year collected income tax worth P9.7 billion from 1.7 million self-employed individuals. The collection figure meant that a self-employed individual on the average reported an annual income of only P18,000.

The average reported income “was way below what’s reasonable,” Purisima told the Inquirer staff during a roundtable discussion earlier this week.

He said the government would target, over the medium term, to increase the average reported annual income of self-employed individuals to as much as P350,000—a figure he described to be realistic.

He said the BIR would step up its audit of the self-employed sector and employ more auditors to implement the action plan.

Purisima said the Aquino administration would beef up collection without increasing tax rates or imposing new taxes. The finance chief said plugging revenue leaks through tighter auditing should force people to pay accurate taxes.

Taxes collected by the BIR accounted for more than 60 percent of the government’s revenue.  Michelle V. Remo