I read with much interest Internal Revenue Commissioner Kim Henares’ justification of the exclusion of some of Forbes’ richest Filipinos from the Bureau of Internal Revenue’s list of the highest taxpayers for 2011. The commissioner would like the public to make a distinction between assets and income before passing judgment.
It may be noted that the assets of most Filipinos who made it to Forbes’ 2011 and 2012 lists of the richest grew in value in 2012 compared to the previous year’s. Take Henry Sy—in 2011 his total asset worth was listed at $7 billion; in 2012, it rose to $9 billion. Increase in asset value is considered income, whether realized or unrealized; but only the former is subject to tax.
But what if Forbes was wrong? What if after reevaluation half of the asset value increase is unrealized? What if some of the assets were stashed away in China or some other place?
But take away half of the increment in Sy’s total asset value, and that will still leave $1 billion in realized additional assets for 2012. Which could translate into $350 million or so in taxes, or P14 billion. Let’s say only a quarter of this is due as taxes, that is still P3.5 billion in tax revenue for government, a whopping 100 times more than the total tax paid by Kris Aquino, the No. 1 in the list of the Philippines’ Top 10 Individual Taxpayers.
Like Sy, Lucio Tan and John Gokongwei also increased their asset value by $2 billion each in the same period. For these very rich Filipinos to miss the BIR’s list of top 10 individual taxpayers is nothing new, but it defies logic.
As unbelievable is Manny Pangilinan missing both the Forbes and the BIR lists in 2009. Pangilinan’s Smart is, however, BIR’s top corporate taxpayer for 2011, while two of Smart’s vice presidents made it to seventh and eighth places in the individual taxpayers’ list.
Personalities aside, a question hangs: Is tax avoidance still legal? This issue is important because regular employees are taxed at source, plus VAT (12 percent). If your income is imposed a 35-percent tax, it would mean a total tax burden of 47 percent. Plus the sin tax (10 percent). And how about capital gains tax (5 percent)? Definitely this is inequity. The problem here is that the rich can get away with what the regular guy can’t. You can read the inequity in Forbes.
—BONG CALANTUAN,
btcalan2an@yahoo.com