End-of-the-year economic woes
When it rains, it pours.
That may best describe the unpleasant situation the country finds itself in at present, which may continue in the coming years on account of recent events.
With public anger still simmering over “ghost” and substandard flood control projects, news that some officials of the Bureau of Internal Revenue (BIR) run an extortion scheme on private businesses through the use of tax audits has added to an already gloomy economic outlook.
According to Sen. JV Ejercito, Letters of Authority (LOA)—the authorization to examine the books of account of businesses to determine their compliance with tax obligations, issued by the BIR—have been misused and resulted in 70 percent of collections made through them winding up in the pockets of corrupt BIR officials. (What else is new?)
What made that illegal money-making strategy more galling was that it was applied to diplomats and foreign business groups that the government has been wooing for years to invest in the Philippines to help improve the economy.
Perhaps, those BIR officials did not know (or if they did, chose to ignore) that those potential sources of dirty money are covered by strict anticorruption laws that prohibit them from engaging in unlawful business practices, such as bribing tax authorities to minimize or avoid taxes.
To the credit of newly appointed BIR Commissioner Charlito Mendoza, he immediately ordered the temporary suspension of all field audits and related operations of the BIR.
For the BIR officials concerned, that order couldn’t have come at the worst of times because this is the time of the year when LOAs are the most effective means to make the season financially happy for them.
So now, we have the spectacle of two government offices—the Department of Public Works and Highways (in connivance with some lawmakers) and the BIR—exposed for brazenly stealing the people’s money to fund expensive lifestyles at the expense of the public.
For taxpayers, the flood control projects scandal is sufficient motivation and justification not to be truthful in the payment of taxes or, when the opportunity presents itself, minimize to the extent legally possible those payments.
Unless one is a masochist, there is no joy in seeing hard-earned money being squandered by people tasked with efficiently managing the country’s financial resources.
Come the income tax filing season in April, it should not come as a surprise if the revenue collections of the BIR fail to meet their respective targets due to outright refusal to pay, underpayment or increased availment of tax avoidance benefits.
That some BIR officials use LOAs to line their pockets is an open secret in the business community.
But businesses that are owned, directly or indirectly, by politically influential people or conglomerates that are known to operate by the book on tax matters and are prepared to spare no expense in proving their point are, by and large, immune from the LOA caper.
Anyway, the “losses” from those businesses can be recouped from other businesses that think it is the better of discretion to accept bribery as a part of doing business in the country, rather than go to court to contest questionable tax assessments.
The BIR’s power to issue warrants of distraint or garnishment on a taxpayer’s bank account to compel the payment of taxes, which can adversely affect business operations while in place, is reason enough to agree to a compromise settlement (assuming the BIR official concerned is upright), or make tax payments in the manner described by Sen. Ejercito.
The business community will be watching closely how Mendoza will restore credibility to LOAs as an essential instrument through which the BIR can effectively perform its responsibility as the primary revenue collection agency of the government.
But the problem is, some habits are difficult to give up if it would mean making changes in a lifestyle that one has been used to through that habit.
