Taxes and incentives, Part 2

Professional athletes have been left behind in the consultation regarding the twenty percent withholding tax that the Bureau of Internal Revenue will impose on selected professions beginning this month. The entertainment community, seen as another big target for the increased collection, has submitted its position paper. The fractured sports fraternity has yet to present a unified response.

It’s relatively easy for the entertainment industry to present a united front; it’s a small world. There are only a handful of big movie producers and television networks, and artists work or have worked for almost everyone in their careers. But in the case of professional basketball players, boxers, billiards players, jockeys and others, their worlds are far apart; they don’t even see each other in the course of regular business.

Appearing on a morning talk show with representatives of government and the entertainment sector last Friday, I said that government is facing a two-pronged problem, both dealing with public perception. First, there is the painful belief that the entertainment and sports communities are the subjects of a witch hunt because they are so high profile. Remember that the same groups have already been through the grinder with the Bureau of Immigration, and the movie industry has been summoned to the Senate a few times in recent years.

Secondly, even if other countries impose higher taxes, the ordinary citizen believes that his money is being put to good use. Whether the government will admit it or not, recent media exposes have shown public officials using government vehicles for their personal benefit, and roads frequently being dug up despite their being in perfect condition.

The BIR has explained that the tax is only part of a "creditable" withholding tax, which will be deducted from the total annual taxes everybody pays. The only difference is that the additional ten percent is being collected in advance. Honestly, there are other ways of increasing collection, aren’t there? In the face of the present economic crunch, people need their money now.

Consider the case of a pro boxer. His prize money is announced way in advance, so everyone knows how much money he makes. He wins his purse (luckily if he fights more than two or three times a year) and this alone has to pay for his training expenses, food, travel, medical bills, and manager’s fees (which by themselves can reach fifty percent or more).

With the intense training now required to keep up with the raised level of competition, professional basketball players are lucky if their careers last ten years. So, even if they make more, it has to last them a lifetime. And there have been many stories of pros ending up jobless and bankrupt. They were never trained to handle money.

In the course of the ongoing dialogue with show business personalities, the BIR is trying to figure out what is the appropriate threshold to start imposing the 20 percent scheme. The figures being mentioned are in the P150,000 to P500,000 annual income range.

The Manila City Council has already passed a resolution declaring that it will not support the new tax formula. Luckily for them, there are a few celebrities in the council who appear in movies and on television. But athletes do not really have a voice in the matter. Who would the government consult with?

Perhaps the Games and Amusements Board can act as mediator since it is the government agency that regulates professional sports. And if the PBA and MBA had active players’ unions, they could convene and decide on a course of action to best protect their interests. At the end of the day, they could just shrug their shoulders and pass on the burden to the ordinary fan through increased prices of admissions, merchandise and concessionaires’ products. Or, in the case of pro boxers, they could simply decide to live abroad and escape taxation totally. Many of the world’s top tennis players have called territories like Monaco and certain European countries home simply because of the more relaxed tax laws.

My biggest argument in holding off the implementation of the new tax scheme is simple. These are very hard times for all of us. Often, the only source of inspiration our countrymen have is sports and entertainment. Actors and singers are akin to sports heroes in that they help Juan de la Cruz forget his problems, and inspire him to push on. Remember that Roman Caesars used to put on massive entertainment spectacles (including full-scale battles between ships inside the Roman Coliseum) just to keep their citizens from staging a revolt. "Bread and circuses" is often the only thing that buys a government time to institute true reform.

Taxing our nation’s sports and entertainment heroes, our people’s biggest sources of inspiration, is not the answer.

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Note: Worldwide Marriage Encounter Philippines will have its Silver Jubilee celebration at the Cebu Convention Center from November 16-18. Enrichments and exhibits will be held during the celebration, climaxing with the Eucharistic celebration by His Eminence Ricardo Cardinal Vidal. Interested couples may contact the WME National Secretariat at 813-1559 or 844-1552.