That is what Bureau of Internal Revenue chief Kim Henares’ and Fernando Zobel de Ayala’s explanation is, that wellknown tycoons aren’t among the country’s top 500 taxpayers because they didn’t file their annual income tax returns ( ITRs) and instead availed of the socalled “substituted filing” scheme.
They must think Filipinos are so gullible. According to our tax regulations, everyone earning income in the Philippines are required to file his ITR except for the following:
• Those earning a minimum wage or less, or those whose income does not exceed P60,000, the tax on which has already been remitted to the BIR;
• Those whose sole income are from bank deposits, dividends from stocks, and capital gains from property and stocks;
• Those who have only one employer, who directly remits to the BIR its officers taxes (the so-called “substituted filing” system).
The Zobels Jaime Augusto and Fernando as well as such tycoons in the Forbes roster of top Philippine billionaires such as Enrique Razon, Robert Coyiuto, Frederick Dy, and William Uytengsu aren’t, by any tax expert’s esoteric justification, in any of these categories who are exempt from filing ITRs. They are executives in many firms, and therefore cannot avail of the substituted filing arrangement.
The BIR and these tycoons owe it to the nation to explain why they didn’t file their ITRs, as four million Filipinos did this month.
The BIR appears not to realize that the release of its list of top 500 taxpayers, in which President Aquino’s sister Kris came out as the no. 1 taxpayer and in which many of our billionaires aren’t included, has made our country not only the laughing stock of the world but also portrayed the Philippines as a nation of tax-evaders. How can, in a lower middle income country, foreign and local executives as well celebrities account for twothirds of its top 500 taxpayers?
Imagine this. The US Internal Revenue Service makes public its list of top taxpayers and it is celebrity Paris Hilton who comes out as the biggest American taxpayer. Many of its renowned billionaires like Bill Gates, Warren Buffet, the Walton brothers, and Jeff Bezos aren’t in the list.
If this ever happens, there would be such an uproar in the country that probably the IRS chief would be fired if proven his list was erroneous, the billionaires harassed to eventually disclose their tax payments, and their firms’ stock prices would plummet.
This is exactly what the BIR’s top 500 list is, yet we have lost the capacity for outrage in this country. The BIR and Zobel make an explanation regarding substituted filing—that can be very easily proven false—and yet media acquiesces. One columnist even made a smarmy defense of tax-evading tycoons, claiming that the “employment and business opportunities generated by (their) companies translate into more tax collections for government.”
One of our nation’s biggest flaws is that we, especially media, are so quick to accuse politicians and corrupt bureaucrats for the morass the country has been unable to crawl out of, but are so sheepish in pointing to the real culprit: the economic elite.
Never mind if rough- andtumble Chinese- Filipino tycoons like Lucio Co and William Gatachalian or lowprofile ones like Michael Cosiquien and Edgar Sia don’t appear in the BIR’s top 500 list.
But for well-known tycoons like the Zobel brothers, Lance Gokongwei, Enrique Razon, and entrepreneurship-champion Jose Concepcion III not to be appearing as top taxpayers is, if you really think about it, scandalous.
These people are the youth’s models, the epitome of the Filipino business elite. The Zobels and their people are even known to be champions of “corporate governance”, and their father even made the unprecedented move of joining demonstrations against corruption under the Marcos regime. The Zobels especially make up the face of Philippine business to the world, the country’s link to the global corporate elite, as they proved by single handedly getting President Aquino a last-minute participation in the Davos conference. They are among the billionaires closest to Mr. Aquino, who is claiming to be on an anticorruption crusade.
And they’re not in the country’s top 500 taxpayers list, and so far have arrogantly refused to explain why?
What would they tell their foreign partners if asked why? I’m not sure which is worse for the country’s image: That they can outsmart the BIR in not appearing in the list, or that that agency is both so incompetent and irresponsible to have released such an erroneous list. If property tycoon Andrew Tan was so forthright to release data on his income and tax payments, why don’t the Ayalas, Gokongweis, and other tycoons do so?
It is certainly possible that they aren’t appearing in the list because of some BIR bureaucrat’s boo-boo. But Henares has insisted that her list is correct: “Those that did not appear in the list, we went out of our way to check their returns to make sure there was no mistake. We’ve been able to verify and there seems to be no mistake.”
What kind of message is the BIR sending to the country’s tax payers— especially the middle class whose incomes are automatically deducted every payday with the 10 percent withholding tax— if the country’s well-known billionaires aren’t in the top taxpayers list, and aren’t explaining why? How can the BIR chief Henares claim that she is boldly running after tax evaders such as actresses and doctors, when she can’t collect the proper taxes from tycoons?
Britain’s top taxpayer, David Harding, founder of hedge fund Winston Capital Management, who paid the equivalent of P2 billion in taxes, or 39 percent of his P6 billion income in fiscal year 201-2111, had warned that if high earners who avoid “paying their fair share provoked anger among the rest of the country . . . I think the resentment and anger is felt among the middle class – the civil servants, the teachers, the soldiers, the public sector workers, the professional classes, the backbone of the nation.”
That’s certainly the case here. If the billionaires aren’t paying their fair share of taxes, why should I? That’s what millions of unhappy taxpaying Filipinos are thinking.
To change this kind of thinking, Henares should make public the income and taxes of the Zobels and other billionaires not in the top 500 taxpayer list, her authority for her to do so is that which she invoked for releasing that list, Section 14 of Republic Act 9480. Or she is just afraid of her boss’ friends?