Palace backs BIR drive for payment of right taxes

MANILA, Philippines—Malacañang on Tuesday threw its support behind the Bureau of Internal Revenue (BIR) campaign to shame professionals into paying the right taxes, saying they should “look at the bigger picture.”

“The bigger picture is that we need more tax collections to be able to fund our economic development programs,” Communications Secretary Herminio Coloma told reporters.

Saying the BIR campaign was “mainly persuasive,” Coloma encouraged professionals to “sit down” with the bureau, including the Department of Finance, to “thresh out their differences so that a win-win approach may be arrived at.”

The Philippine Medical Association (PMA) is up in arms over a BIR newspaper ad suggesting that physicians were doctoring their taxes. The ad, which appeared in the Inquirer on Sunday, portrayed them as burdens to honest taxpayers, such as teachers.

“[T]o project to the entire nation through the trimedia that medical doctors are tax cheats per se is absolutely unfair,” PMA president Dr. Leo Olarte said on Monday.

Internal Revenue Commissioner Kim Henares responded by saying that doctors should not get hurt by the newspaper ad.

Henares said the print ad was based on numerous complaints that the BIR had received from individuals that their doctors were not issuing receipts.

“Instead of getting hurt, shouldn’t doctors who pay inaccurate taxes feel ashamed,” she said.

PMA seeks dialogue

A day after lambasting the BIR, the PMA is seeking a dialogue with the tax bureau.

“We want to amicably settle the issue. We’re hoping to have a dialogue with [BIR] Commissioner [Kim] Henares,” Olarte told the Inquirer in a phone interview.

Asked if his group would demand a pullout of the ad showing a female doctor riding piggy-back on a female teacher, Olarte said, “We hope they would voluntarily, willfully pull it out.”

He said the print advertisement would not inspire professionals or doctors to pay the right taxes.

“Those who got hurt by the ads were actually the ones religiously paying their taxes. Doctors resented it. How would they be encouraged to pay if at the end they are being portrayed as tax cheats?” Olarte said.

Two docs don’t pay taxes

“There may be one or two doctors who do not pay their taxes, but it should not be a basis to condemn all doctors. Why condemn everybody for the fault of the few? The ad stereotyped doctors as tax evaders, which is very unfair and unacceptable,” he added.

Olarte said the PMA did not want to engage the BIR in a “fight.”

“There’s no quarrel between the PMA and the BIR. We’re working together silently and we acknowledge that all doctors, all our members should pay the right taxes. We support BIR’s campaign to collect proper taxes because we believe that taxes are the lifeblood of our nation,” he said.

In an earlier interview, PMA spokesman Mike Aragon said the ad was unexpected since the organization had an ongoing partnership with the BIR.

“The PMA created a committee that would help the bureau succeed in collecting correct taxes from doctors and this engagement is going on. That’s why we were surprised that we were given this impression as tax cheats,” Aragon said.

The BIR campaign against tax evasion is meant to shore up the bureau’s revenue collection and boost state coffers amid the rising expenditure requirements of the government.

Besides publishing ads, the BIR files tax evasion cases once every two weeks in the Department of Justice as part of the tax drive.

Coloma acknowledged that “professional organizations may have differences with the BIR in the aspect of creative presentation of the advertisements.”

“I think it would be regrettable if, just because of differences on creative presentation, they will not abide by the campaign of the government,” he said.

“I am certain that in their hearts, they want to contribute.”

Tax effort

Coloma said the government’s target was to “increase the tax-to-GDP (gross domestic product) ratio to 16 to 18 percent by 2016.”

“As of 2013, the country’s tax-to-GDP ratio reached 13.6 percent, but still below the 17 percent recorded prior to the Asian financial crisis in the 1990s,” he said.

Coloma said the goal was to improve the country’s tax-to-GDP to the level of those by other members of the Association of Southeast Asian Nations.

Citing a World Bank report, he noted that the tax efforts of Thailand, Malaysia and Singapore stood at 17.6 percent, 16.1 percent and 13.8 percent, respectively.

“We call on all professional organizations to urge their members to pay the right taxes and help in the country’s overall economic development efforts,” Coloma said.

Need for review

In the Senate, the chair of the committee that deals with revenue measures said there was a need to review government reliance on the honesty of professionals in determining how much taxes they should pay

every year.

“Right now, the system of tax collection for professionals is a self-assessment system. It relies on the honesty of the individuals. Maybe we should look at how effective the system is. We should look how to make it simpler to encourage voluntary compliance,” Sen. Juan Edgardo Angara told reporters.

The committee on ways and means on Tuesday heard bills on several revenue measures and Sen. Miriam Defensor-Santiago’s resolution seeking an inquiry into the alleged tax evasion worth P388 billion committed by self-employed professionals.

Accountant, online seller

Aside from doctors, the BIR’s print ads on professionals that don’t pay the right taxes also featured an independent accountant and an online seller.

In the hearing, an official of the BIR said the agency wasn’t zeroing in on professionals, particularly physicians. But upon prodding by Angara, BIR Assistant Commissioner Marissa Cabreros cited Makati City’s 2011 figures that indicated that a good number of doctors were not paying the right amount of taxes.

“Fifty-eight point five (58.5) percent of self-employed doctors in Makati paid less than P35,000,” Cabreros said when Angara and Sen. Nancy Binay asked for the basis of the BIR ad on doctors as tax cheats.

She said that out of 1,178 registered doctors in Makati City in 2011, 689 paid less than P35,000. She said the lowest income tax paid by a doctor was P10. “Next is P82.50, next is P100.”

Angara said the BIR and the PMA should work together to collect the correct taxes.

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