Sari-sari stores, market vendors next to be taxed

THE Aquino administration wants to collect more taxes by cracking the whip on sari-sari store owners, market vendors, and the estimated 40 percent of Filipinos who work in the underground economy.

“If you sell something worth P25, you should already issue a receipt,” Internal Revenue Commissioner Kim Henares said.

“Why should somebody pay tax and somebody else not pay?”

Henares said Internal Revenue had started talks with market vendors on the need to issue receipts. Even pedicab drivers would be part of the new drive.Regulations must be simple and easy to carry out.

“We need to have rules that will make compliance easy for those employed in the informal sector,” Henares said.

She did not say how much the government hoped to collect from the renewed effort, but various estimates put the number of sari-sari or small mom-and-pop convenience stores at 700,000, and that means they make up 30 to 40 percent of the total retail sales in the country. Most are home-based and unregistered, and employ family members as staff.

Faced with a swelling budget deficit that reached P196.7 billion in the first half of the year, the government is trying to raise revenue without imposing new taxes.

On Wednesday, National Treasurer Roberto Tan said revenue agencies would be pressed to bolster collection.

As part of its renewed collection effort, Internal Revenue wants to raise the tax base from the current 5 million fixed-income earners to at least 11.5 million, or half of the 23 million employed members of the Social Security System over the next six years.

For the near term, the bureau is cracking down on tax evaders, filing its first criminal case under the Aquino administration against an owner of a chain of pawnshops, William Villarica.

The bureau said Wednesday it would include Villarica’s luxury cars, including a Mercedes Benz SLR, a Ferrari, a P26-million Lamborghini Gallardo, two Toyora MR-S and a Volkswagen New Beetle, in the tax case against the pawnshop owner.

Henares said bureau investigators found Villarica, who paid only P25,607.25 in taxes from 1998 to 2009, owned at least six luxury vehicles that he bought at the time he did not file his income tax return.

“There are other cars, so the assessment [on back taxes and penalties] will go up because the case was originally based only on the Lamborghini,” Henares said.

“We are still accessing the deed of sales. It will be easy to check because he joins car shows,” she said.

Henares said the Lamborghini sports car alone would create a tax deficiency of P16.2 million plus P6.3 million in value-added tax against Villarica.

Based on the National Internal Revenue Code, tax evasion and willful failure to file income tax returns carry a penalty of imprisonment of up to 10 years.

Henares said another major tax evasion case would be filed Thursday next week, but she declined to give details except to say the case began in 2007. –Joyce Pangco Pañares, Manila Standard Today