Taxing the "Pambansang Kamao (National Fist)"

From 1988 to 1989, I worked as a Tax Accountant (handling Philippine taxation) for a Law Firm in Makati. Then from 1989 to 1991, I worked as Chief Accountant and as Tax Associate (handling US, Hong Kong, and International taxation) for the Hong Kong branch of the Romulo Law Office. That was more than 20 years ago, and therefore I cannot anymore even the slightest bit consider myself an expert in taxation. Hence, these days, any opinion I have on taxation can only be considered as a layman's opinion, not as an expert's opinion. Pertinently, in my line of work, whenever I deal with taxation issues I can only do so as a “generalist,” and I have to work with fellow CPAs and/or with Tax Lawyers who are the “specialists.”

That said, allow me to share my layman’s perspective on this current tax issue that confronts our “Pambansang Kamao.” To simplify matters, I will focus only on his earnings from the US (and not Macao or wherever else).

-------

Please consider the following:

* If you work in the Philippines, surely you are aware that taxes are immediately deducted and withheld from your earnings. Your employer, or whomever else is the source of your earnings, is "obligated by law" to immediately withhold your taxes. Therefore whether you like it or not, whether you are diligent about paying your taxes or not, or whether you are even aware about it or not, you will definitely still end up paying your taxes. Meanwhile, Philippine Tax laws, just like most other Philippine laws, were originally copied from the laws of the United States. Hence, since Philippine tax laws and US tax laws are similar, I think it is safe to assume that if you earn income in the US, then your taxes are immediately withheld, just like in the Philippines.

* If you live and work in the Philippines, then you will be using and taking advantage of infrastructure and other resources that are available to you in the Philippines. The roads you travel on, the street lamps that light your way, the traffic enforcers that direct your commute, the police force that ensure your safety, and countless other resources. Whether you like it or not, you will be using all of these resources, and they all cost money. This is why you pay taxes to the Philippine government.

* In the same light, if you work in the US, then you will be taking advantage of their resources, thus you will have to pay taxes to the US, not the Philippines.

* If you work and derive earnings in the US, then you must pay US Tax Rates that are more than 30%. Hypothetically speaking, if you will also still have to pay the Philippine government for another layer of taxes that are also worth more than 30% (please note that I am exaggerating in order to drive home a point), then your total taxes will add up to as much 65%, leaving you only 35% for your net take home pay. With a 35% net take home pay, you will only have enough money left to pay for your food and shelter so that you can continue working. In other words, you live to work to live to work, reduced to a robotic existence. In which case, Filipinos might as well never work in the US (or anywhere else abroad) anymore. Pertinently, this is why double taxation is not allowed. (Please note that US tax rates might even be higher than Philippine tax rates, please see http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2013.)

* Based on all the foregoing premises, I think it is safe to assume that when Manny fought in the ring and earned his income in the US, he automatically already paid taxes. There may have been some lapses on his part when it comes to furnishing the Philippine BIR with copies of tax returns and related documents that he submitted to the US Internal Revenue Services or IRS (which is the counterpart of the Philippine Bureau of Internal Revenue or BIR), but IN PRINCIPLE it is unlikely that he has actually committed anything worth being punished for. Come to think of it, since Manny earned much of his boxing income in the US, then if he indeed committed any form of tax evasion, it is the US government (specifically he IRS) that would have already and immediately gone after him. It's really that simple, nothing complicated.

* Moreover, although he did not anymore have to pay taxes to the Philippines, the fact of the matter is that he still remitted a great deal of his "Net-Income-After-Taxes" back to the Philippines -- Paying the salaries of his very many Filipino employees (who are therefore able to support their families), purchasing Philippine commodities and properties, donating to Philippine charities, etc., etc., in other words significantly contributing to the Philippine economy. Come to think of it, isn’t it that the one of the primary reasons that our nation is still able to survive, despite all the corrupt and wealth-grabbing politicians, is that we have so many Filipinos who, just like Manny, work and pay taxes abroad, but remit the rest of their earnings to the Philippines?

-------

* To be perfectly honest, when the news first broke out, I could not understand why they were suddenly going after Manny. It was only after I got to read the two articles posted here below that I finally understood what the tax drama was all about. Like I said, I am merely a “generalist,” and thus what I have written above are merely my “generalist” opinion. To read the opinions of the “specialists” or the “experts,” I respectfully recommend that you please click on the following:

(1) “Manny Pacquiao, the BIR, and Taxation's Power to Destroy” by Atty. Mel Sta. Maria
http://www.interaksyon.com/article/75788/mel-sta--maria--manny-pacquiao-the-bir-and-taxations-power-to-destroy

(2) “Pacquiao – Latest Victim of Hold-order Mindset” by Federico D. Pascual Jr.
http://www.philstar.com/opinion/2013/11/28/1261787/pacquiao-latest-victim-hold-order-mindset

-------

* FINALLY, they say that they are not harassing Manny. Well, this is what I have to say about that:

-- Have you ever experienced receiving a Meralco bill that indicated that your electric bill for the current month is greater than your electric bill for the previous month by as much P1,000? How did you feel? Were you able to sleep that night? Can you imagine therefore what it feels like to receive word that you might owe tax charges of as much as P2.2Billion?

-- Many people say that Manny, or more specifically Manny’s accountants and lawyers, will eventually be able to smoothen all this out, because it’s all just a matter of documentation. I agree. But still, great anxiety and significant grief have already been caused. Indeed, Mommy Dionisia has already been rattled to the bones and made ballistically upset – thank God she did not suffer a heart attack. In other words, the damage has already been done. In most other circumstances, if someone causes you that same level of grief and anxiety, you can sue them for damages, right? But in this case, after the case is finally smoothened out and resolved (which I hope will indeed eventually happen), after all is said and done, Manny's persecutors will probably just shrug it off and pretend it didn't happen. "Kung sobra mang nasaktan at sumama ang loob ni Manny at ng pamilya niya, then sorry na lang, ganun talaga eh." "Wala lang."

-- Manny has already brought so much honor to the country. Yes there are other Filipinos who have also brought honor to the country, such as Lea Salonga, Charice Pempengco, Arnel Pineda, etc., but I think it is safe to say that they -- perhaps even all of them combined -- pale in comparison to Manny. Indeed, Jessica Sanchez (who may even be more famous than the three singers that I have just mentioned) was recently merely a front act for Manny at Macau. Truth be told, I think that the only way that a Filipino (who is not the country's president) can outshine Manny on the world stage is by winning the Nobel Prize. Seriously.

-- Decades ago, the Philippines was unheard of in many parts of the world. Now, when we get hit by a super typhoon, the whole world rushes to our aid, and I think we have gained recognition and respect worldwide because of people like Manny.

-- Therefore, considering that there is a good chance that Manny may have actually already paid all (or at least most of) the taxes that he has to pay, and considering that he has already brought so much honor to the country, is it too much to ask that instead of persecuting him, that they should instead just persistently try to reach out to him and patiently guide him? After all, they have already been far more patient with so many other individuals or companies who are the actual and bigger tax evaders. Any way you look at it, slapping Manny with a notice for a P2.2Billion tax charge (even if it is merely a potential tax charge), and freezing some of his assets a day after he has just brought honor to the country, simply leaves a bad taste in the mouth.

-------