What kind of government would demand some of the highest and the most number of taxes in the world, and yet would simultaneously make the process of paying them one of the most difficult? Would that be Iran, Iraq or Afghanistan?
Of course not. It would have to be our “more fun” motherland, which beat all of those three strife-torn countries in the ease of paying the exorbitant tributes exacted by government on businesses.
The ninth edition of a study, conducted on 189 economies worldwide by the international auditing firm Pricewaterhouse Coopers (PwC) and called “Paying Taxes 2015,” found that the Philippines ranked 127th in the ease of paying taxes and fees for a hypothetical medium-sized domestic company. And yet, according to the same study, the Philippines already charges taxes and other fees—the average total tax rate—at 42.5 percent of a company’s commercial profit; that’s 6 percentage points higher than the Asia-Pacific average and 1.5 percentage points more than the world rate.
The PwC study, which covered the year 2013, also found that a medium-sized company in the Philippines pays 36 kinds of taxes and fees every year and spends 193 hours preparing to pay them. The rest of the world collects, on average, 25.9 taxes and fees annually.
Bolivia, the country adjudged to have the worst tax procedure of the 189 countries surveyed, requires 42 taxes and fees annually. Now compare that—and the Philippines—to the winners in the list: co-leaders United Arab Emirates (four payments in 12 hours), Qatar (four payments, 41 hours) and third-placer Saudi Arabia (three payments, 64 hours).
Closer to home are the fourth- and fifth-ranked countries: Hong Kong with only three tax payments, and Singapore, with five tax payments. No wonder these two are regional economic powerhouses and magnets for investors in this part of the world.
Even closer to home are the stratospheric rankings—compared to ours, of course—of Thailand (62nd) and Malaysia (32nd). And the Philippines only beat Laos (129th) by two notches and was soundly trounced by Myanmar (116th).
Senator Francis Escudero, who divulged the results of the PwC study and is a longtime advocate of reforming our 19-year-old tax reform program, was quite naturally incensed. He urged voters, whom he is asking to elect him vice president next May, to make tax reforms an election issue so that more leaders would throw their support behind legislative efforts to amend the Tax Reform Act of 1997.
“How can we encourage investors to come and put their money here when a third of that will go to taxes that will be difficult to pay?” he asked. “What does that say about us?”
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Malacañang Palace, which is so proud of its supposed economic gains and the humongous “savings” that it stockpiles from its national budget, has been caught red-handed once again. All the chief palace spokesman, Herminio Coloma, could say is that the government, through the Bureau of Internal Revenue, is doing everything to make paying taxes more efficient to boost the economy.
There is really nothing that the Aquino administration can do but ‘fess up. After all, it is already doing its best to stop congressional initiatives to lower both personal and corporate income taxes.
And if the PwC study proves anything, it’s that the government not only demands that you pay more and then makes it very hard for you to pay. Once it gets its hands on your tax money, it can’t even spend it on needful projects like infrastructure, preferring instead to amass stockpiles of savings.
And the Filipino taxpayer, individual or corporate, won’t even utter a peep about the oppressive tax regime imposed by this money-hungry but incompetently stingy administration. That’s the strangest thing of all.
The tax-burdened working class, in particular, seems perfectly all right with giving back nearly 50 percent of their pay in income taxes and contributions on a monthly basis for questionable services. (The math is really simple: a middle-income wage earner already pays 32 percent in income tax, 12 percent in VAT and mandatory pension, housing and PhilHealth contributions that take such a huge bite from his or her monthly paycheck.)
And what does the corporate and individual taxpayer get in return for all of these taxes, which the government makes it so hard to pay? Underspent budget items impounded as savings and no infrastructure to speak of, that’s what.
So the next time you hear about the huge amounts spent for suspicious dole outs, calamity aid and even television ads for administration candidates, maybe you should repeat what those “epal” politicians say: This is where your taxes go.
But maybe you’re one of those who don’t really care about where your taxes are spent. In that case, you deserve all the non-services you’ve been getting—and all the hardship and grief that paying taxes causes you.