For several months, I have been reading the news about the tax reform bill being pushed by some senators, most notably of all, Sen. Sonny Angara. He has been explaining the more important reasons why he is after the proposed reforms that actually reduce the taxes of most Filipinos in the working class. I know he will have more than enough support in his advocacy.
A few weeks ago, though, I received an email from a person I admire for his many qualities, his love of country and his deep sympathy for the poor. Also, as an entrepreneur, he believes that some taxes are unreasonable, or dampening to those who would like to establish new businesses. Despite this, he is most determined to pay the company’s employees way above minimum wage even if he does not have to, and seeks ways to even drive their income higher. Of course, in doing so, he sacrifices higher profit margins.
He also pays the prescribed taxes even though he believes that these taxes being imposed on businesses like his can be more reasonable and practical. He does not attempt to haggle with the BIR and will, in fact, resist any attempt by BIR officers to lower his taxes in exchange for under-the-table commissions. His opinion that the business taxes being imposed are too steep for most businesses is subordinated to his understanding that taxes are an obligation of a citizen. I had thought that he wrote me to complain about his complaints on some business taxes because he had shared this opinion to me before. Instead, he wanted more income taxes to be paid by everyone.
I asked him why he was not in favor of lowering income taxes when most employed Filipinos who depend on simple salaries and wages are the most affected by tax rates claimed to be the highest in the region. His answer was simple – taxes are a citizen’s way of investing in the development of his country, a citizen’s patriotic expression. But if we look at taxes as a tribute, and they were during colonial times, then any amount is onerous.
The idea of democracy is government of the people, by the people, for the people. Our present experimentation of democracy a la America is not long enough to erase what the Filipino people have been used to for much longer, almost four hundred years of colonialism. Worse, our post-WWII democracy was even interrupted by the Marcos dictatorship, a throwback actually to the authoritarianism of four centuries.
Under foreign masters, taxes were tributes. They were not designed for Filipinos but for every people who are subjugated by another country. That is how we understood the meaning of taxes from the beginning, that they were imposed tribute by foreign masters. The government, and especially the BIR, would do well to understand the way taxes come across to taxpayers. If there will be a campaign for more taxes, or for more people to pay taxes, this will only generate more resentment unless the embedded understanding of taxes as tribute is reversed to one of taxes as a patriotic contribution.
It is also just as understandable that many who earn much more but whose income are not subjected to the same simplified withholding taxes imposed on the majority who earn less have a tendency to avoid or evade paying taxes. The opposite of tribute to colonial masters were the privileges given those who collaborated with the authorities. It was not only the Catholic Church, the Insulares and Peninsulares who were given privileges, it was also a lot of local native leaders who chose collaboration for personal gain. That privileged status has extended to the present just as the resentment by the working classes regarding taxes.
I know there is a need for tax reforms, but I believe that the more strategic need is for a new way to understand citizenship and how that citizenship is worth sacrificing for. It is a difficult challenge but one that has to be addressed anyway. We cannot have a country whose citizens think first of what they can get from government rather than what they can contribute to it. This is why the need to address and defeat poverty is most essential because the needy and the hungry make weak patriots, if at all.
There remains a 50-60 percent sector among our people who rate themselves as poor. And this number is already much improved because of the impact of the OFWs to their families and nation. Economic demographics have long used the categorization of only 10 percent for Classes A, B and C, and 90 percent for Classes D & E. The 90 percent did not pay taxes and the 10 percent tried their best to avoid it. The advertisements of the BIR may have upset some doctors and lawyers, among others, but their tax record stinks to the high heavens.
How do we reduce the taxes of majority and increase the taxes of the minority? If it is true that only a few hundred families control the bulk of the wealth of the country, then it is also true that reducing the taxes of the majority will make less of a negative impact than the positive impact of the elite paying the right amount. But simply talking about reducing taxes as a stand-alone formula for tax reform is talking about the smaller slice of the pie. The bigger slice is the rich paying a rich man’s proportionate share.
Good luck, then, to my friend who wants to raise more taxes to spur more development, not reduce them, and to the majority who pay their taxes when their much richer counterparts are allowed by law unimaginable deductions or ways to circumvent their obligations. Good luck, too, to the poor who do not pay income taxes; may they find regular employment to give them regular income – even if they pay taxes. Most of all, good luck to the Philippines and may the motherland find more patriots.