Tax Gripes

by Juan L. Mercado

Well, it’s that time of the year folks. Deadline for filing income taxes is April 15. Are you  stumped  in grappling with BIR Form 1701? Or is your problem the “Certificate of Creditable Tax Withheld At Source”?

Don’t feel bad. Hindi tayo nagi-isa. At his Princeton University laboratory, physicist Albert Einstein grappled with his income tax, then admitted: “This is too difficult for a mathematician. It takes a philosopher”.

Supreme Court chief justice Renato Corona pooh-poohs Einstein. Sure, Corona’s  Statements of Assets and Liabilities are studded with under declarations. But these are “not intentional”, Corona’s defense counsel Serafin Cuevas argues. “Gaps can be remedied after a review. If it’s not intentional, no criminal or liability is incurred.”

No kidding? “Cuevas would like the public to believe that in financial matters, CJ Corona is somewhat bumbling,” blogger  Raissa Robles notes. “What does he know about filling up SALNs accurately?”.

The defense panel doesn’t say Corona was a tax lawyer who once worked for the country’s largest auditing firm. At Sycip, Gorres & Velayo, he specialized on regulation of corporate and financial institutions. Why, he even dispensed tax advise in a Manila Chronicle column.

No. Corona’s column was not the reason Manila Chronicle folded. But would you buy a second hand car from someone who can’t get his SALNs right? — to pirate a line from the anti-Richard Nixon campaign..

“I’m am proud to be paying taxes (to government),” the late humorist Arthur Godfrey once said.…”The only thing is I could be just as proud for half of the money.”

Over in Sarangani province, Congressman Emmanuel Pacquiao is battling taxes. The fighter will brawl with welterweight  boxer Tim Bardely on June 9 (before retiring?). “Manny” has been jabbed, meanwhile, by the Bureau of Internal Revenue.

Pacquiao failed to answer a subpoena to submit nearly 60 documents last February, says Rozil Lozares,  BIR Revenue Region 18 director. These included tax records and contract endorsements from last year with Nike, Hewlett-Packard, State Street Produce, Hennessey liquor, among others.

Forbes Magazine listed Paquiao as the 24th highest-paid athlete in 2011. And in his last fight against Juan Manuel Marquez, Pacquiao pocketed $22 million in addition to fight earnings of $6 million.

As a result, charges were filed against Paquiao March 1 in Koronadal City. Pacquiao says he hasn’t received the complaint from the BIR — yet. “I’ve no intention of running away from this case,” he told reporters.  He sent his accountant and a staff member to review the request for documents.

Some ask what penalties do the law books provide? Fines may range from P5,000 to P10,000 — peanuts for multi-millionaires. That does not include a jail sentence of one year to two years.  But the  first round hasn’t ended.

Perhaps, Paquiao should look up what the Cambridge economist John Maynard Keynes always taught.  ”The avoidance of taxes is the only intellectual pursuit that carries any reward.”

So, where in the Philippines do tax beats take Keynesian counsel seriously?

Contrast taxes paid and goods and services produced by the National Capital Region against  the rest of the country, suggests the National Statistical Coordination Board. You’ll stumble across “a severe imbalance in the economic and administrative topography of the country”.

National Income Tax Paid Per Capita and Individual Income Tax Paid Per Capita scrape at rock bottom outside Metro Manila.  They range, believe it or not,  from only P640 and P180 in 2010,  for instance, in Region XII (North and South Cotabato, Sarangani and Sultan Kudarat,)

The NSCB has a yardstick dubbed: “Average Ratio of National Tax Paid to Gross Regional Domestic Product (GRDP)”.  From  2006-2009, the highest payors were – surprise? —  the National Capital Region.  CARAGA, which is made up of the two Agusans and two Surigaos, came in a very distant second’.

What sticks out, though, were productive regions. Their output or GRDP were substantial, as in Region IV: Cavite, Laguna, Batangas, Rizal and Quezon. Ditto for Region III.

“Yet, they paid lower amounts of national tax,” NSCB notes.  Could this be an indication that taxes are not being efficiently collected and properly paid elsewhere, such in Region X, Region XII, Region VII?

Indeed, “income tax returns are the most imaginative fiction being written today”, as author Herman Wouk once put it.

In a Feb. 29 note titled  “Sexy Satistics”  the NSCB asked” “Where are the rich?”  This tongue-in-check comment is anchored to some  hard tax facts. Here are excerpts:

“Your best chance to find your 30-39 year old Romeo is in  Marinduque, the two Mindoros, Palawan and Romblon.  But the likelihood is he won’t be rich”

Average per capita income of the richest 10% of families in MIMAROPA was P123,781 in 2009.  That is the second lowest after the Autonomous Region of Muslim Mindanao — where plunder became synonymous with the Ampatuan fiefdoms.

Other regions where the poorest of the rich live are in Region V and Region VI, where the average incomes are P131,929 and P 136,529, respectively.  The richest of the rich, of course are in NCR.… Income distribution is most unequal in Regions VIII, IX, and X.

“The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.”  Back to our BIR Form 1701 then.


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