Sidewalk vendors: Evading taxes and propelling piracy

Like our national government, most local government units (LGUs) right now are running on very tight budget. This is primarily due to the initiation of more relevant projects and aggravated by an apparently outpaced income that is principally dependent on collection of taxes from the usual taxpayers. 

Due to this recurring scenario, some LGUs are now considering new sources of revenue. For one, the City of Lapu-Lapu is looking at the possibility of collecting fees from companies inside the Mactan Economic Zones (1 and 2). Unfortunately for the City of Lapu-Lapu, the Philippine Economic Zone Authority (PEZA) took the cudgels in defending them as it embraced its congress-bestowed autonomy.

On the other hand, the City of Cebu, is now running after “not-for-profit” hospitals and educational institutions. Stressing the cost of rendering basic services to these institutions, the city threatened to cut these off if demands for taxes and fees are left unheeded. Shielding themselves with a constitutional provision, these institutions went to court and have not given an inkling of succumbing to the Cebu City Mayor’s threats and unrelenting pressure.

While we are with these two LGUs in their initiative in tapping new sources of revenue, we suggest that they should start with subjects that are not difficult to identify and are clearly evading taxes. Institutions that can readily bank on constitutional provisions for their defense aren’t easy to bleed. They shall continue to use these provisions as shields to protect them from any impositions. Therefore, increasing these LGUs’ revenue could mean a long and arduous wait.

In the meantime, therefore, that these institutions shall hide under the skirts of the courts and constitutional provisions, these LGUs must consider other possible sources. They are easily identifiable. In fact, some of these possible sources are so visible and too plenty to miss. They are our street entrepreneurs a.k.a. sidewalk vendors. Calling them sidewalk vendors isn’t degrading but an understatement. It is a fact that most of them have entrepreneurial smarts and have only preferred to be labeled as such (sidewalk vendors) to justify their tax-free existence. These entrepreneurs are selling their wares, like bootleg DVDs, garments, fruits, etc., in the street by choice. Most of them never went for employment because they chose to become employers themselves. Sadly, despite all these opportunities, they have remained tax-free.

Reportedly, in aggregate amount, the businesses generated by these street entrepreneurs can even approximate that of a department store. Knowing fully well that department stores are paying millions in taxes, it is a no-brainer as to how much this bunch of seemingly tax-free businessmen can contribute.

These counterfeit designer brand garments and accessories usually originate from developing countries such as China or the Philippines. These items, depending on where these are made or plagiarized, find their way to the Philippine market either through importers or wholesalers. These items are more often undocumented and sneaked into the country through the backdoor. Since legitimate business establishments demand for BIR registered receipts, these items seldom go through the normal distribution channels like department stores or specialty shops.        

Finding difficulties through legitimate channels, these unscrupulous beings found some advocates in our sidewalk vendors. Designer brand garments, belts, bags and other accessories are decorating walls along the sidewalks. Bootleg DVDs and CDs of popular movies and games are sprawled in tarps even in ramps for handicapped at amazing bargain. Apparently, legitimate channels like department stores and mall operators (through specialty shops) are in the losing end of the price war. Feeling the sting of a dwindling patronage, mall operators are joining the fray.   What use to be their open spaces are now turned into flea markets. Occupants, who are mostly sidewalk vendors, are squeezing in into partitioned spaces for a reasonable rental. Believing that street items can be bought at mall operated flea markets at sidewalk prices, sidewalk diehards have started shifting. Not only that, buyers who never had the balls to shop in the sidewalks for fear of their safety, are now gorging on these stuffs.   

Unmindful of the dire consequences, customers and retailers (sidewalk vendors and flea market occupants) alike are just too preoccupied about their own interests. Directly benefited by their self-centeredness are counterfeiters and pirates. Unscrupulous individuals who never care to contribute to our economy through tax payments. Badly, this misguided patronage is killing legitimate and taxpaying institutions due to unfair competition. Consequently, the government is losing honest taxpayers and will continue to starve for the much needed revenue. 

Likewise, another group of potential taxpayers are not seen in the sidewalk but on the road. They are the motorcycle-riding Indians who ply their lending businesses from one stall to another on a daily collection basis. Ironically, these tax-exempt individuals are using roads that are built and maintained by honest taxpayers’ money. Through the manner by which they carry out their businesses, interest charges are certainly higher than banks, pawnshops and lending investors. Yet, they never drop even a single cent to our government coffers. 

Well aware that they are even crossing mountain ranges and reaching the remotest mountain barangays of Cebu, the volume of their lending businesses could ran into millions. More likely, some of them are even bigger than most pawnshops and lending investors in Cebu today. As foreigners (though most of them are using Filipino spouses), they should have been, in fact, taxed at a higher rate. Sadly, however, they have remained tax-free.

Just like our “not-for-profit” institutions, these businessmen, in aggregate, are also gathering tons of garbage and have in fact help thieves escape by blocking the streets with their wares. It’s about time that they should also pay their dues.

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