Tax amnesties – forgive and forget
Iread somewhere that the word of the year is "complicity." It is defined as "partnership or involvement in wrongdoing." I cannot explain why the word came to my mind when I read the general tax amnesty that is proposed by Congress. By coincidence, the Ombudsman ordered a closure on the investigation of the foreign accounts of the President.
The Philippines is perhaps one of the countries with the most number of tax amnesties. Ten tax amnesties were declared during martial law, with many of the laws ending with a warning that it was going to be the last. But this was easier said than done. More amnesties were declared by the succeeding administration; eight by President Cory, and two more by the Arroyo administration. President Estrada had his ERAP program which granted taxpayers with immunity from audit and investigation provided he complied with certain conditions. Some tax amnesties masqueraded as voluntary assessment programs where taxpayers were taken out of the BIR radar provided they declared their income correctly and paid a certain amount.
Why is our country a most forgiving one? It reflects the inherent weakness of government in law enforcement. Government fails to flex its muscles in enforcing what is right and has to give an incentive for taxpayers to correctly declare their assets. It also shows how taxpayers undermine the capacity of government to administer its policies and laws. Taxpayers become confident that their assets hidden within and outside the country will not be discovered, or if their wrongdoings are discovered, they can get away with it. It shows how little taxpayers think of sharing the responsibility of paying for better public services. And, it demonstrates very little trust on government. Why pay your taxes if they will just be wasted on corruption, inefficiencies, incompetence and lies?
Thus, it is literally with a broken heart that I look at amnesties. It reflects a broken country and a broken citizenry. It shows how laws favor the rich and the powerful. It speaks of our poor justice system. Tax amnesties do not only forgive and forget, but shields the offender from prosecution today and in the future. It tells him that it is alright that you lied with your Statement of Assets and Liabilities (although we impeached a former Chief Justice and about to impeach one for the same offence). Isn't this quite ironical?
Tax amnesties can always be defended. Government can say that the measure will raise much revenues that will enable it to build more infrastructure. The taxmen will say that it will help tax administration by broadening the base. Businesses will say that it will give erring taxpayers a new slate and give them an opportunity to participate in government. We have all heard these before. And yet, there will be more amnesties, with each measure, giving the same promise.
The only amnesty that worked was the first one that was declared by President Marcos, PD 23. It was preceded by a total overhaul of the BIR and BOC which convinced taxpayers that government meant business. The succeeding tax amnesty laws did not even reach their targets and progressively weakened the moral fiber of the nation. The honest taxpayers resented the lack of fairness. In their minds, it does not pay to be honest because compliance is not rewarded. Those who are brazen enough to monkey with laws are not only forgiven, but are allowed to go scot free for all the violations that have been committed.
Tax evasion is a game and the taxpayer will continue to play the game if he is convinced that his chances of winning are greater than losing. Tax amnesties tilt the odds in his favor. Government makes easy money but ends up the loser in the end.
mguevara@synergeia.org.ph