THE Bureau of Internal Revenue has a lot of explaining to do. And the sooner it does so honestly, the better. The questions here are the following: Why the sudden shortfall in the April? Is there really a connivance between certain BIR officials and their clients among the country’s large taxpayers as insinuated by Albay Representative Joey Salceda? What specific steps are being done by the BIR leadership to address the problem?
People are demanding these explanations because so far, the BIR has not done enough to come to grips with the issue. Supposedly, among the reasons that caused an P18.35- billion decline in collection are the following: huge tax payments in the first three quarters of 2005 resulting in smaller last-quarter payment; and that many companies suffered reduced sales, hence the reduced taxes. BIR is telling us that suddenly taxpayers have become so diligent they started paying early. However they were losing money so they paid less tax. Business is hard, BIR is telling us.
There is something wrong with this explanation because the same data sheets from the BIR also told us that government netted P9.52 billion from the “increase in income taxpayers with increases in sales/gross receipts.”
So business after all is not bad. It should not be because in the same period, government collections from the value added tax rose 75.51 percent, indicating that people are indeed still spending their money while complaining about higher VAT, and lots of businesses are funneling the sales profits straight into their cash registers and their bloated bank accounts. Business should be good because, thanks to favorable weather, the farming and agribusiness sectors are having a field day. Business should be good because our overseas workers are still sending in dollars as if there’s no tomorrow. Business should be good because exports are recovering, posting a 25 percent jump in April. And of course, the outsourcing companies, including call centers, are pumping in lots of money in the economy. In 2005, they made more than US$2 billion dollars and their combined payroll, our own back of envelope computations show, could reach as high as P5 billion a month.
Our only problem is that many of those who made tons of money did not pay the right amount to taxes. Who are they? Representative Salceda says they are the large taxpayers, including businesses, and the professionals. The BIR figures reveal this as well. While the VAT collections rose 75 percent, income taxes from large taxpayers rose only by 3 percent, causing a 19-percent shortfall vis-à-vis BIR’s targets for income tax.
“Corporates, sensing the improved collections from consumers would provide the numerical shield, just unleashed an army of tax experts using all devices to avoid taxes in conspiracy with corrupt BIR bureaucrats,” Salceda said, and we suspect the same. BIR should explain this long and hard. And perhaps, heads should roll.
Many of us taxpayers may have noticed the sudden jump in our water and electricity bills this month. And we attribute this to the reformed VAT, a bitter pill we are told by government as something that we should swallow so the country’s finances will improve. We need the “reformed” VAT, the government told us, so that our tycoons and big businesses will have access to cheaper funds resulting from improved sovereign ratings. And we acceded, not knowing that higher VAT collections could only be abused—if Salceda’s suspicion is correct—in order to mask underperformance or worse, “areglohan” or fixing in other areas of collection.
In short, he complained, consumers have been used as the shield for the bigger taxpayers—yes, the same overburdened public that has been shackled to a tax system that won’t allow fixed-income earners any respite but does not have the creativity or the will or the determination and guts to run after those who for years have paid puny taxes while gobbling huge profits.
One fixed-income reporter who spent a fortune on a relative’s recent surgery said it so well when, seeing the VAT on his receipt for a bedpan, quipped, “Oh, so it has come to this. You pee, you pay.” Reminds one of that jeepney sticker that says “jingle lang ang pahinga (we only break for urinating).” But here, one sees there’s no respite from paying taxes—and worse, after breaking one’s back paying them, one hears the government saying it fell short of collection goal.
The BIR, nay the government as whole, should fix these leaks, otherwise, as we had warned earlier in this same space, more people will be disillusioned and will rationalize not paying the correct taxes, or not paying at all. Fearing that corrupt officials might just pocket their tax payments, small business might just be tempted to go underground or cheat on their taxes. And if everybody would have this mentality, we are going to wake up one day suffering the worst fiscal crisis borne out of people’s total lack of trust of the BIR.