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With the
way Congress has been legislating tax policies, it seems
there is little incentive for people to pay the correct
amount of taxes.
This is
sad, especially when well-meaning people in government
work very hard to make things right to correct the flaws
in the bureaucratic system, but in the end get stymied
by faulty legislation.
Legally,
these bureaucrats have no choice but to implement the
law, despite its infirmities. All because Congress
didn’t do its homework, or had succumbed to pressure
from certain interests, or was influenced one way or the
other.
Take the
case of the new tax amnesty law passed by Congress on
May 28. One news report appropriately described that
piece of legislation as nothing more than a chance for
tax delinquents to clear their records.
In
short, for tax cheaters to legitimize or legalize their
practice, and to gain government imprimatur for what was
obviously a brazen criminal act of not paying taxes.
It’s a lot like getting pardoned for murder, without any
jail time, as long as blood money was paid—which was
computed as a small percentage of what was actually
owed.
Under
the latest tax-amnesty law passed by the last Congress
under the leadership of House Speaker Jose de Venecia
Jr., tax delinquents who would apply and qualify for
“amnesty” would not be charged with tax evasion if they
would pay the Bureau of Internal Revenue (BIR) the sum
equivalent to a measly 5 percent of their net worth as
of 2005. And that amount will cover all their tax
liabilities, including interest.
To
exemplify, a businessman or corrupt public official with
P100 million in assets and no liabilities can get away,
literally, with tax evasion through the years by paying
just P5 million to the BIR. One can just imagine how
much that businessman or corrupt official actually
earned in order to accumulate his P100 million in
assets.
Easily,
he would have had to pay taxes of at least P30 million
on that, and yet the government would settle for just
one-sixth of the actual tax due. And by applying for
amnesty, the businessman or the corrupt official
legitimizes his “earnings.” All profits tax-paid in the
end, therefore, are legal, right? A lot like money
laundering?
The real
sad part is that in one news report, a finance official
was quoted as saying that under the implementing rules
and regulations of the new tax amnesty law, even
taxpayers with pending tax-evasion cases could apply.
But obviously, those whose cases have been already
decided with finality by the courts are disqualified.
The
finance official was likewise quoted as saying that the
new amnesty law was expected to attract as many as
150,000 to 200,000 tax-delinquent individuals and
companies to apply for amnesty. It is a wonder how
Finance can actually estimate the number of tax cheaters
and yet not be in a position to do anything about
them—save maybe to offer them amnesty.
In that
sense, why should people pay the correct taxes, or why
should they pay taxes at all, when they can just apply
for amnesty later on and pay just a fraction of what
they actually owed?
In the
same manner, why work to buy a house when one can squat
along the rails and await government relocation and the
offer low-cost home financing?
The BIR
and Department of Finance reportedly wanted the
implementing rules and regulations of the new tax
amnesty law to cover only “hard-to-catch” tax evaders
and exclude those that have been caught and charged in
court already.
But
lawmakers apparently opted to include in the amnesty
program even those with pending tax cases, so that the
government could get as many tax cheats as possible to
pay their obligations.
This is
another case of great thinking from great minds in
Congress. After all, with more tax cheats paying just a
fraction of their actual obligations, the government
still increases its revenues as it reduces the number of
tax delinquents. Perfect, really.
So what
will the BIR do now with the large companies that
allegedly owe close to P5 billion in back taxes? Of the
amount, some P2 billion was reportedly owed by banks as
unpaid taxes on special-savings accounts and
foreign-currency deposits, and another P500 million was
allegedly owed by insurers for unremitted
documentary-stamps taxes on insurance policies.
Another
P1.6 billion was reportedly owed by large companies now
under audit on suspicion of tax delinquency, while P776
million was expected from companies that have lost in
their tax-evasion cases. Will these tax delinquents be
allowed to apply for amnesty, as well as, skip their tax
obligations and pay a “penalty” of equivalent to about 5
percent of their net worth?
It’s a
wonder the government is always cash-strapped. But why
should Congress insist on collecting only a small
fraction of what tax delinquents owe when the government
can, in fact, collect more by refusing to compromise?
But then, the amnesty is provided for by law, and the
BIR and Finance will just have to implement what
Congress has legislated.
Ultimately, it’s like running a factory and selling
goods to wholesalers, who, in turn, sell the same goods
to retailers. And while the retailers sold the goods to
consumers at full price, it paid for the same goods to
wholesalers at probably 20-percent discount. In turn,
the wholesalers are supposed to pay the factory at
another 20-percent discount.
Unfortunately, the wholesalers had refused to pay the
factory, prompting the factory to sue. In turn, a
settlement was offered, and the factory would receive
only 20 percent of what was actually owed by the
wholesalers.
Obviously, this factory is a lot like the government.
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