Compensation income earners bear brunt of higher taxes

MANILA, Philippines – Individuals whose taxes are automatically deducted from their salaries are increasingly paying a larger share of income taxes than the self-employed and professionals, according to the Department of Finance (DOF).

In a speech before the general membership meeting of the Federation of Philippine Industries Inc. last Thursday, Finance Secretary Cesar Purisima said compensation income earners continue to bear the brunt of higher taxes as collections from the self-employed continue to be unreasonably low.

Data from the DOF showed that corporations accounted for 57.6 percent of total income tax collections in 2012, down from the previous year’s share of 59 percent.

Compensation income earners, on the other hand, accounted for 34.5 percent of the total, an improvement from last year’s level of 33.8 percent.

Purisima said that in Makati, 171 out of the 297 accountants who filed their income tax returns paid less than P60,000 last year. Aside from that, 64 percent of the lawyers in that city also paid below P60,000.

According to the Bureau of Internal Revenue (BIR), there were 1.82 million professionals registered with the agency but only 402,934 of them paid taxes.

He said the top 2,000 large taxpayers contributed 61 percent of the BIR’s total collection in 2012, down from their previous share of 62 percent.

In its fight against professional tax cheats, the BIR is auditing professionals like lawyers, doctors and dentists who pay less than P200,000 in taxes.

The government aims to boost the number of taxpayers and increase the average payment to P200,000, which is seen to translate to an additional P360 billion in collections or 2.1 percent of the country’s gross domestic product.

The Social Security System and the Professional Regulation Commission both counted two million self-employed and professionals, while the Department of Trade and Industry listed 2.1 million. The National Statistics Office counted 2.9 million. –Zinnia Dela Peña (The Philippine Star)