Finance seeks higher tax take from the self-employed sector

THE GOVERNMENT is seeking a sharp increase in income tax payments from the self-employed sector as part of a campaign to improve collection efficiency, a Cabinet official said.
"We want to increase the average to P100,000 per person per year," Finance Secretary Cesar V. Purisima said at the sidelines of the Tax Management Association of the Philippines (TMAP) meeting on Tuesday night.

"I told the BIR (Bureau of Internal Revenue), I will look at that average. I will look at it in every RDO (revenue district office)," he stressed.

The tax bureau estimates that there are 1.7 million self-employed professionals in the country. The sector only paid about P9.8 billion in taxes in 2010, equivalent to P5,783 individually, Mr. Purisima said.

"This means that they were earning even below the minimum wage which is unrealistic for lawyers, doctors...," he pointed out.

With the P100,000 target, the BIR is pressed to increase the average income tax payment of professionals by over 15 times. Revenue Commissioner Kim S. Jacinto-Henares believes, though, that the challenge will be met.

"I think it is doable," she said in a text message yesterday.

In his keynote speech, Mr. Purisima also urged tax practitioners to help in the campaign to shore up revenues.

"I have been in the private sector. I know we want to please our clients, but we must also make sure that everyone pays their taxes," he said.

The Finance chief reminded the organization that the fight against poverty begins with the efficient collection of taxes, which are necessary to fund government programs and projects.

Lina P. Figueroa, a principal at Punongbayan & Araullo, welcomed the plan to improve tax collections. She cautioned, however, that the target should be reasonable.

"If [a taxpayer] is paying P100,000 in taxes per year, and he is availing of the optional standard deduction, he should have an income or revenue of about P500,000 per year or about P41,600 per month," Ms. Figueroa said in a text message.

The BIR is waging a campaign to stem tax evasion among self-employed professionals, after the problem was highlighted by President Benigno S.C. Aquino III in his State of the Nation Address last year.

On a related note, Mr. Purisima said the government would be sticking to its revenue tack this year by pushing for two priority measures in Congress.

The "sin" tax bill, which aims to increase excise taxes on "sin" products like alcohol and tobacco, is at the committee level in the House of Representatives. The fiscal incentives bill, which aims to streamline the tax perks granted to businesses, is awaiting deliberations in the Senate.

"We are focused on this two. These are not new taxes, they are amendments of the existing law to make sure they are more effective and productive in terms of generating revenues," Mr. Purisima said. -- Diane Claire J. Jiao