Economists: Easier tax procedures likely to boost state revenues
By John Victor D. Ordoñez, Reporter
A PRIORITY BILL that seeks to make paying taxes easier will probably lead to increased revenue collection, according to economists.
“The proposed Ease of Paying Taxes Act would boost sales and other business transactions, thereby increasing tax revenue collections through this positive paradigm shift,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message at the weekend.
The Senate and House of Representatives last week ratified the measure, which now awaits President Ferdinand R. Marcos, Jr.’s signature.
Senator Sherwin T. Gatchalian, who filed the Senate bill, said the reconciled version of the measure includes taxpayer classification, a file-and-pay anywhere mechanism, exemptions for micro taxpayers from withholding taxes, reduced penalties for micro and small taxpayers and exemptions for overseas Filipino workers from filing income tax returns.
Bienvenido S. Oplas, Jr., founder of think tank Minimal Government Thinkers, said simpler tax requirements would lead to more micro and small companies complying with their tax obligations.
“If tax compliance rules are simpler and penalties are less harsh, more informal sector entrepreneurs will surface as formal businesses and would register as taxpaying entities,” he said in a Viber message. Many of these small companies refused to expand to avoid tax payments, he pointed out.
Mr. Gatchalian earlier said the measure aims to modernize tax administration by removing outdated procedures and make tax payment more efficient.
Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said lawmakers should craft more tax measures. Easier taxes will not do much to cut the government’s debt and budget deficit, he added.
“We should introduce new tax measures especially targeting the wealthy,” he said in a Facebook Messenger chat.
The National Government›s budget deficit widened to P133 billion in August as revenues declined, according to data from the Finance department.
Tax revenues fell by 5.82% from a year earlier to P291.7 billion as collections by the Bureau of Internal Revenue (BIR) slipped by 6.73% to P213.5 billion.
The tax bureau expects to increase collections by 13% this year to P2.64 trillion. The BIR collects about 70% of government revenues.
In August, BIR filed 127 complaints of tax evasion worth P6.1 billion against companies that failed to report company revenues.
The government loses about P500 billion annually to tax evasion, BIR Commissioner Romeo D. Lumagui, Jr. said in February.
“We urge our taxpayers to participate in all of the BIR processes and avoid hiding since we will give you an opportunity to explain what you need to pay,” he said in August.
