More than a decade ago, I was one of the many young Certified Public Accountants (CPAs) who attended a tax seminar sponsored by the Philippine Institute of Certified Public Accountants (PICPA). As taxes will always be a hot issue, the seminar was a natural sell out. The venue was overflowing with participants. Everyone was trying to squeeze in to hear a bit of new tax developments and to find some luck in an effort to hear some clarifications on some ambiguous issues affecting his company. With an authority from the Bureau of Internal Revenue (BIR) at the helm, everyone expected a day of knowledge and wisdom.
During the open forum, a participant’s (obviously, a well-known practitioner) hand was reaching for the sky. His hand was high enough to be left unnoticed and his stature was so imposing to be ignored. Appropriately, he was recognized by the moderator and was given the floor. Knowing him, the question was as expected relevant and direct to the point. However, relevant it may be, the question didn’t strike me the most. What struck and intrigued me was the opening statement.
Valiantly, he opened by saying, “In democratic countries like ours, everyone is presumed innocent unless proven guilty. In the Philippines tax system, however, taxpayers are presumed guilty unless proven innocent.” This statement isn’t difficult to understand unless we refuse to. It simply means that, unless proven otherwise, all taxpayers in this country are deemed tax evaders.
While this statement remained dormant for more than a decade, the same isn’t dead at all. In fact, such thought was recently resurrected by a seemingly controversial proposal of the three (3) honorable lawmakers from the House of Representatives. Recently, Buhay Party-list Representatives Rene Velarde, Ma. Carissa Coscolluela and William Irwin Tieng filed House Bill 2082. Such proposed bill “aims to improve tax compliance in the country by preventing the falsification of receipts and similar documents.”
This proposal found an ally in the National Tax Research Center (NTRC) of the Department of Finance (DOF). The NTRC has expressed its support to this proposal “to use watermarked paper in all receipts and similar documents to be issued by state agencies, local government units and private and commercial establishments. ”
The NTRC said, “the move would enhance and strengthen the tax monitoring and collection functions of the government.” It further noted that, “It is also expected that the use of watermarked paper in all commercial and business transactions could minimize if not completely eliminate the use of falsified receipts and other documents.”
This proposal is so one-sided to say the least. It only emphasized the enhancement of tax monitoring and collection. These proponents are totally unmindful of the disadvantages of its implementation. Knowing fully well, however, that lawmakers are egging to increase collection to increase their pork barrel, this move is readily understandable.
While we don’t openly suggest to these honorable proponents to withdraw House Bill 2082, we urged them to heed our side’s (taxpayers’ side) arguments on this issue. Just like the NTRC, we don’t believe that the use of watermarked papers can totally guarantee that tampering and duplication will never take place. Yes, it may help a little bit but just like the usual concerns on treasury bills, peso and dollar notes, it will never prevent the proliferation of counterfeits. To understand this, just consider the fact that these duplicating or counterfeiting are prevalent among treasury bills, peso and dollar notes despite using highly-specialized papers.
For this reason the NTRC further emphasized in their position paper that “There is still no assurance that such watermarked papers would be insulated from such illegal acts and practices. It may only reduce to a certain extend but not completely eliminate the use of falsified receipts and other documents in all commercial and business transactions.”
On top of these concerns, the most important issue that the proponents must consider is the cost of doing business, the printing cost, in particular. Obviously, the proponents, in trying to ponder multitude of ways and means in increasing collection had overlooked the business establishments’ terrible situation.
The NTRC had also expressed their concern on this aspect. Though seemingly understated, the NTRC said that the “price of a booklet of receipts with water-marked paper is P180 while the cost of ordinary receipts ranges from P75 to P100 per booklet.”
While we share the same thoughts with the NTRC on the unwanted rise in printing cost, we differ in the amounts. To emphasize this point, while some firms right now are using carbonized and bond papers for their invoices and receipts, other cost conscious establishments are using onion-skin and newsprints to survive. Notably, a ream of short bond carbonized paper is above P200.00, an ordinary bond, depending on the quality and thickness, costs between P80.00 and P130.00. On the other hand, onion-skin and newsprints (depending on the quality) ranges between P65.00 to P80.00 per ream. Comparatively, watermarked papers right now (as researched in the internet) is priced at no less than P1,000.00 per ream.
Obviously, printing costs will rise by between 500% (for carbonized paper users) and 1,500% (for onion-skin and newsprint users). As this is a legitimate business operating expense, establishments will definitely pass this on to the consumers. Consequently, this will help pad prices again to unaffordable heights. Too high, that even God-fearing consumers will attempt to be unethical by asking establishments not to issue invoices or receipts when they buy for as long the commodities’ prices are devoid of printing’s added costs.
With this scenario imminent, even if we can avoid counterfeits or duplications, compliance or issuances will be relatively reduced. When that happens, tax collection suffers and other opportunist businessmen will take advantage of its passage to unreasonably increase prices thus further burying the consumers.
Indeed, in this excruciating phase where all of us are in agony, any proposal that will add to our miseries is not just wanton jeopardy; it is a monumental display of stupidity.
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