New taxes

We’ve all heard that old adage from Benjamin Franklin – that the only things certain in life are death and taxes.

And yet, while I know the importance of taxes in keeping the wheels of government running, I find it bewildering when I hear about proposals from the Bureau of Internal Revenue (BIR) to slap new taxes without seemingly considering the bigger picture.

A few weeks ago, for instance, the BIR said it is planning to impose creditable withholding tax of one percent on one-half of the gross remittances of online platform providers to their partner sellers or merchants.

According to the draft revenue regulation, the obligation of the online platform providers will be in addition to their existing withholding tax obligations.

The proposal also imposes creditable withholding tax on single purchase transactions or sales by irregular suppliers or sellers, the BIR also said.

The BIR identified online platform providers as those that connect buyers and sellers of goods and services. Data showed that there are roughly two million entities involved in online selling as of last year.

Heavy blow

A consumer group, however, said the proposed policy by the BIR is a heavy blow to ordinary Filipinos who will suffer the effects of the new tax.

As such, the United Filipino Consumers and Commuters (UFCC) is calling on the BIR to reconsider the proposal.

“At a time when the country has yet to recover from the crippling effects of the COVID-19 pandemic fully, introducing new taxes that will ultimately hurt the poor is the last thing the country needs right now,” the group said.

More taxes

UFCC believes that the plan to have the new one percent withholding tax will be the beginning of more taxes to be imposed upon the already suffering public. It has already been reported that the Department of Finance plans to introduce new and higher taxes in 2024.

“We appeal to President Marcos to be on the side of the ordinary Filipinos in our crusade against new anti-poor tax measures,” it said.

The UFCC is hoping that the BIR will not push through with the planned one percent withholding tax.

“The welfare of hardworking Filipinos making a living as riders, freelancers and online sellers, as well as micro, small and medium enterprises which are considered the backbone of the Philippine economy that provides livelihood to thousands of workers, are at stake here,” it said.

The consumer group is very much on point. As we may all have noticed, e-commerce grew exponentially during the pandemic. Filipinos who lost their jobs turned to online selling to make some extra cash.

Those who could drive motorcycles quickly applied as riders, at the risk of catching the COVID-19 virus, just to earn a living during the pandemic.

This new tax will hurt their businesses which have helped them survive during the difficult pandemic period.

Consumers, too, will bear the brunt of higher prices of goods and services because taxes are always passed on to us, right?

The BIR should do more public consultations on this matter.

Sen. Chiz Escudero was right in warning the government against introducing new tax measures as they would burden the people who have yet to recover from the pandemic and are still dealing with high inflation.

The last six years have been a “very taxing season as a train, or a TRAIN, of revenues was passed,” Sen. Chiz said.

Like the lawmaker, I believe that instead of new taxes, the government should first improve collection efficiency and curb corruption. Do this and I guarantee, the results can only be positive.

Georgia: The Rose Revolution

Why don’t we look to Georgia for lessons on successful tax reform?

Georgia offers a striking example of successful tax revenue reform, the International Monetary Fund (IMF) said.

Following the collapse of the Soviet Union in 1991, Georgia struggled to collect taxes.

There was rampant corruption involving tax evasion, illegal tax credits and theft of government tax revenue. Public finances were in shambles, triggering a revolution.

“Georgia’s sweeping tax reform was made possible after the 2003 Rose Revolution, which gave the new government a mandate to reform the economy and fight widespread corruption,” the IMF said.

Thus, the country’s new leaders adopted a policy of zero tolerance for corruption, and the culture began to change, along with the laws.

In 2004, Georgia passed a revised tax code, with simpler and reduced rates.

Only seven of 21 taxes remained, and many of the rates were reduced,” the IMF said.

There is no one-size-fits all solution in solving tax problems but the Philippines has so much work to do in improving tax collection efficiency.

Ask anyone dealing with the BIR and you will surely get a disgruntled and frustrated Filipino taxpayer.

Dealing with the BIR is the most taxing thing a Filipino citizen can ever experience. Did you know that if you don’t have a record of your tax payments from past years, you will have a hard time finding it in the BIR’s system? The burden of proof is on us. If this isn’t inefficient, I don’t know what to call it.

The BIR’s system is never easy; and eventually you get too tired you have no choice but to resort to fixers, some of whom are, not surprisingly, in cahoots with BIR employees.

I am sure we will see a drastic improvement in collection if paying taxes becomes easier and simpler.

The BIR must seriously fix its system first. Only then can it slap new taxes.

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.