FOR FAIRNESS SAKE!
MOVIE STAR SHOULD PAY
THE RIGHT TAXES!
(This was supposed to be published yesterday, but somehow my internet connection has gone crazy and I cannot access my blog)

I was paying my taxes the day I started my professional life (except for year 2002 because I wasn’t really employed, I was only receiving an allowance, period). For three years the taxes I paid were even higher that my one month salary (that is the price of being single and without any legitimate dependents).

So when the news that the Bureau of Internal Revenue will implement the 10 percent Value Added Tax to professionals, including media personalities, I tend to sympathize on the plight of the movie stars. Why not? Last year BIR increased their withholding tax to 20 percent from 10 percent and now another ten percent?! That would be a whooping 30 percent in taxes. That is too much I said.

Then came the news about the top ten taxpayers from show business with the King of Comedy, Dolphy, on the top of the list. Dolphy paid 2.5 million pesos in taxes last year. Wow! 2.5 million pesos in taxes! That is too big! (for a person like me who paid less than 15 thousand pesos in taxes, that is big already) So why should the government ask for more? If they want to increase their revenue why not run after the big time tax evaders like Lucio Tan! Spare showbiz with another tax!

“Ibagsak ang VAT!”

“Ipaglaban ang ating karapatang magkaroon ng murang palabas!” (okay, okay, that’s O.A. already, but I was trying to make a point, SHUT UP ERIC!).

I was like that until today.

It was really interesting how the media have (well, TV for that matter) kept you less informed about the whole issue. And thanks to the editors of the Philippine Daily Inquirer who lambasted the show business in their January 29 editorial. Read up, and like me, you will be enlightened. Then, join me in saying:

“FOR FAIRNESS SAKE! MOVIE STAR SHOULD PAY THE RIGHT TAXES!”

Orgy of cheating
Posted:10:09 PM (Manila Time) | Jan. 28, 2003
By Editorial

BY NOW probably everyone knows that comedian Dolphy was the biggest taxpayer among movie stars in 2001. He paid close to 2.5 million pesos in taxes that year, a sum that must have looked astronomical to his legions of fans. But what most Filipinos don't know is that Dolphy should have paid more -- very much more -- if he were just like some of his richest fans.

Industry sources say Dolphy is paid a cool one million pesos for every new episode of his long-running comedy series on television. That would earn him, say, 40 million pesos a year, after allowing for the times when some episodes are replayed. Throw in the movies he produces and stars in and his commercial endorsements and he probably grosses 50 million pesos yearly.

If a salaried executive were to earn that kind of money (which is a big if, of course), he would have paid something like 16 million pesos in income taxes after taking away a maximum of 64,000 pesos in personal deductions. That is 32 percent of his taxable income, since he falls into the highest tax bracket. But Dolphy paid only 2.5 million pesos while other big names in the entertainment industry paid even less. Actress and singer Sharon Cuneta, who has a weekly television program and so many commercial endorsements aside from appearing in movies, was way down the list at 19th place, just above TV host and comedian German Moreno who paid a little more than 200,000 pesos. Meaning Cuneta and Moreno paid much less than the friendly bank manager in the neighborhood. And what about actors Richard Gomez and Ruffa Mae Quinto, some of the most vocal protesters against the collection of the 10-percent value-added tax (VAT)? These popular stars paid even less.

How did this happen? Well, the rich and famous are not like the rest of us. Movie stars and entertainers can claim tax deductions for just about anything they buy and any service they get. If they have drivers and bodyguards, they can deduct their salaries from their taxable income. If they eat in fancy restaurants or throw a party, they can charge that as a necessary expense. While a secretary doesn't get any tax deduction for having a manicure, a movie star does. Movie stars and entertainers can even deduct from their taxable income all the money they spend on clothes, while an ordinary worker cannot, even though nobody goes to work without any clothes on (except some movie stars).

But no matter how much they splurge on such items, which are considered necessary for the practice of their trade or profession, it would still be difficult to throw away so many millions in a year's time. This is where "creative accounting'' or simple under-declaration of income comes in. Smart accountants can simply make incomes vanish while some people simply do not report income earned.

This orgy of cheating is not confined to the entertainment industry. Professionals, or those who need a license to practice their profession like doctors, lawyers and accountants, are apparently into it too. According to the Department of Finance, professionals and entertainers, who number about 30,000, paid only 620 million pesos in income taxes in 2001. That comes up to an average of less than 21,000 pesos, which is about what a clerk in a medium-sized company pays the government in a year. And they have the gall to protest loudly that the government is harassing them?

But even in their protest they engage in a lot of dissembling. For instance, they have tried to project the VAT as an added tax. In fact, anyone can always get a refund if the VAT withheld exceeds the income tax due from him. They have also claimed that the VAT will hit their poorer co-workers, like cameramen and back-up singers, hardest. In fact, workers earning less than 550,000 pesos a year have to pay only a three-percent VAT. And they have tried to win public sympathy by claiming that ultimately it's the moviegoer, the patient or the lawyer's client, who will pay for the VAT. If that were so, why are they protesting too much? The fact is that few doctors issue receipts to their patients or lawyers to their clients and they charge whatever amount they want, with or without the VAT.

If the collection of the VAT will result in higher professional fees and prices of movie tickets, so be it. The added burden should be lightened somewhat by the thought that the rich and famous among professionals and entertainers are contributing their fair share to the government's coffers. That is, if that ideal could be achieved at all.