When it comes to corruption perceptions, the Philippines has remained on the low end of the spectrum compared with other countries. Unfortunately, some taxpayers use this perception as an excuse or even a justification for believing that there is no need to pay the correct taxes. Here, the question is: why would a taxpayer part with a portion of his hard-earned money, in the form of tax, when he knows that it might end up in the pockets of unintended recipients? Is the non-payment of correct taxes justified then?
It is important to note that such a mindset creates an even worse situation. Engaging in wrongdoing in response to another wrongdoing ultimately perpetuates a cycle of negative outcomes without any resolution. When taxpayers justify a wrong act as a protest against corruption, it compounds rather than alleviates the problem.
Rather, as a taxpayer, two types of obligations should be considered — first, to pay the correct taxes; and second, to fight against corruption.
In paying the correct taxes, taxpayers may remember the adage, “Give unto Caesar what is Caesar’s.” This resonates deeply, emphasizing the obligation of individuals and businesses to fulfill their tax responsibilities. While frustration with corruption may be understandable, evading taxes, as a protest, deprives the government of the necessary resources for it to function effectively.
Paying taxes is not only a legal obligation, where noncompliance results in civil and criminal liabilities, but also a civic duty that directly impacts the welfare of our fellow citizens. When taxpayers contribute their share to the national treasury, the taxes paid fund the government’s social welfare programs, such as healthcare, education, and housing initiatives, among others, which uplift the lives of many across the country.
In other words, it is essential to recognize that each peso of tax paid represents a potential meal for a hungry child, a textbook for an eager student, or a paved road connecting remote communities to vital services. In essence, paying taxes is not just about fulfilling legal requirements but also about contributing to the well-being of others.
Additionally, as concerned citizens, taxpayers should also be on guard in their dealings with the government by adopting a zero-tolerance stance against corruption. Remember, in a corruption case, there is a “giver” and a “receiver”. Hence, to prevent corruption from taking place at the onset, taxpayers should avoid being a “giver.” There is even no need to entertain the thought of being a “giver,” if taxpayers are confident that they have paid their taxes correctly in the first place. This may sound idealistic, but if taxpayers do not act in the right way, then the cycle of corruption and the mindset of evading tax as a protest against corruption will continue indefinitely.
Moreover, being involved in corrupt practices is punishable by law and would result in imprisonment in addition to other penalties.
On the other hand, it is noteworthy that the Philippine Bureau of Internal Revenue (BIR) has been intensifying its efforts to combating corruption, underscoring a commitment to uphold integrity and fairness in tax administration. Do note that early this year, when the BIR issued its Calendar Year 2024 BIR Priority Programs and Projects under Revenue Memorandum Circular No. 42-2024, one of the programs and projects was the strengthening of the integrity and professionalism of the employees and the institution. This program promotes integrity, honesty and transparency throughout the revenue service by expediting preliminary investigations on complaints/reports against the BIR’s personnel and completing the disposition of administrative cases submitted for decision. The program implements the BIR anti-corruption program. Recent reforms have also focused on enhancing taxpayer education and simplifying processes to reduce opportunities for corruption.
Indeed, safeguarding taxes paid by the taxpayers is a shared responsibility between the taxpayers and the BIR, among other stakeholders. Taxpayers bear the duty to accurately report their income and pay taxes honestly. By fulfilling these obligations, taxpayers contribute to the integrity of the tax system, preventing opportunities for corruption and tax evasion. Conversely, the BIR plays a crucial role in properly enforcing tax laws, conducting fair and reasonable audits, and ensuring compliance among taxpayers and businesses. With shared responsibility, corruption is less likely find its way into the tax system.
Evading taxes is certainly not a justified form of protest against corruption. Instead of combating corruption, tax evasion perpetuates a progression of dishonesty and violations of laws. Hence, tax evasion should be avoided, and corruption stopped.
Without tax evasion and corruption, we can imagine an ecosystem in which all taxes are paid correctly, and every peso is spent by the government on useful projects. This is a dream in which the Philippines achieves its true potential. Whether this dream can happen, or when, surely depends on the collective efforts of all responsible and concerned Filipino citizens.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Olivier D. Aznar is the vice chairman and deputy managing partner and head of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.
