CHIZ: MAKE TAX COMPLIANCE EASIER FOR MSMES, SELF-EMPLOYED TAXPAYERS

Sen. Francis "Chiz" Escudero said the government should make tax payment easier for small entrepreneurs and self-employed Filipinos, which comprise the second largest class of workers in the country.

Escudero, who has been pushing the 16th Congress to legislate tax reforms, said the tax issue is not just about lowering tax rates but simplifying tax payment procedures to encourage compliance among micro, small and medium enterprises (MSMEs) and self-employed professionals.

"I believe all income-earning Filipinos would want to pay taxes because it makes them feel they are part of nation-building, but the high tax rates and the tedious payment system are discouraging compliance," said Escudero, frontrunner in recent vice-presidential voter preference surveys.

"How can your regular taxi drivers or tiangge stall owners afford to pay accountants just to comply with Bureau of Internal Revenue (BIR) regulations?" he said.

MSMEs comprise 99 percent of all businesses in the Philippines.

Self-employed Filipinos--meaning, employers, own-account workers and members of cooperatives--account for 26.2 percent of all workers in the country, the second biggest labor category after wage and salaried employees, according to the Philippine Statistics Authority.

Escudero said many self-employed workers do not register with the BIR because the process is so tedious. Registration alone requires mayor's business permit, occupational permit, Occupational Tax Receipt (OTR) or Professional Tax Receipt, contract of lease, proof of registration of business name, barangay certificate and at least four other documentary requirements that may apply, depending on the nature of business.

BIR registration would compel self-employed workers to file tax returns monthly, quarterly and annually.

"We want to encourage Filipinos to become entrepreneurs. But the truth is, it is hard to start and sustain your own company here, especially if you operate only on a small-scale, which is what 99 percent of business owners do," Escudero said.

"A small start-up or a struggling company would not hire people or put up an accounting division just to comply with BIR rules. We have to simplify our rules," he said.

Escudero said the Secretary of Finance, who has the authority to promulgate the manner in which income taxes are paid and tax returns prepared, can consider adjusting the schedule for filing tax returns. "Self-employed workers and owners of MSMEs rely mainly on themselves to do everything--run and market their business, find clients, do the work, attend to administrative matters. They do not have the luxury of time, so perhaps, we can help them by making paying taxes easier," the senator said.

He said lessening the frequency of filing tax returns might encourage more self-employed workers to register with the BIR and acquire a legal personality because tax compliance would not be such a burden anymore.

He pointed out that studies have shown that improved tax collection is what the county needs, not higher taxes.

"Our incredibly high tax rates are not only turning away foreign investments but are also discouraging entrepreneurship," Escudero said.

"The opponents of tax reform insist that we will lose revenue if we cut tax rates. What they fail to consider is that more people will want to pay their taxes if these were fair and compliance was easy," he said.