CHAPTER I
INTRODUCTION
According to the 2012 International Monetary Fund statistics, the economy of the Philippines is one of the emerging markets and is now the 40 largest in the world !he Philippine go"ernment#s main source of re"enue are ta$es %ne of the kinds of ta$es is income ta$, which is a go"ernment ta$ imposed on indi"iduals or ta$payers that "aries with the income or profits of the ta$payer Income ta$ in the Philippines is a progressi"e ta$ !he ta$ one pay is &ased on how much he earns People with higher incomes pay more than people with lower incomes !he 'ureau of Internal (e"enue is committed to collect ta$es for further de"elopment of our country co untry !he underground economy is the market that in"ol"es the e$change of goods and ser"ices that are hidden from official "iew 1 )$amples of such acti"ities range from the street street "endors to online online *o&s Acti"iti Acti"ities es of the underground underground economy is &ecoming more rampant Aside from the common reason of the people that &elong to this market, which is lack of education for decent employment, the acti"ities of the underground economy also depends on the capacity of the Philippine go"ernment to enforce laws and collect ta$es
STATEMENT OF THE PROBLEM
Filipino citi+ens may ne"er fully understand their part into the path through an a&undant economy, &ut they will understand it once they know their part and how could they contri&ute into the &etterment of the country Many fear the play of paying ta$es &ecause they ha"e dou&ts of gi"ing what they ha"e worked hard for !he study sought to answer the following uestions1
Christopher Tale, Encyclopedia of Chicago (2005) [database on-line]; available from http:!!!"en#$#lopedia"#hi#a%ohistor$"or%
1
•
.oes the underground economy ha"e the potential to &e the foundation of our country/s economy
•
Is the underground economy capa&le of paying income ta$ if imposed &y the go"ernment
•
ill the underground economy &e willing to pay income ta$es
•
If they imposed a law regarding this matter, how could the go"ernment locate each indi"idual from the underground economy econ omy
•
ow would the go"ernment collect each ta$es
•
Is the underground economy going to cooperate and not &e &iased
•
If the underground economy will pay ta$es, what will &e the &enefits
SIGNIFICANCE OF THE STUDY
!his study is done primarily to fully understand the underground economy as potential ta$payers Most of the underground economy may &e Marginal Income )arners 3MI) &ut, there are a lot of sections of the underground economy that when su&*ected to ta$ation, will &e a great contri&utor and e"entually the foundation of our society !his study study is signi signifi fica cant nt to the the rese resear arch cher erss as it e$pan e$pands ds thei theirr knowl knowled edge ge a&out a&out the the underg undergrou round nd economy economy includ including ing their their economi economicc status statuses es Also, Also, in the future future,, when when policies regarding the ta$ation of the underground economy are implemented, those who ha"e &een inter"iewed already ha"e an idea on the amount of ta$ they are entitled to pay
OBJECTIVES OF THE STUDY
!he study seeks to•
know kno w and and anal analy+ y+ee the the capac capacit ity y of the the peop people le in"o in"ol" l"ed ed in the the under undergr groun ound d economy on whether they should &e ta$ed or not 2
•
.oes the underground economy ha"e the potential to &e the foundation of our country/s economy
•
Is the underground economy capa&le of paying income ta$ if imposed &y the go"ernment
•
ill the underground economy &e willing to pay income ta$es
•
If they imposed a law regarding this matter, how could the go"ernment locate each indi"idual from the underground economy econ omy
•
ow would the go"ernment collect each ta$es
•
Is the underground economy going to cooperate and not &e &iased
•
If the underground economy will pay ta$es, what will &e the &enefits
SIGNIFICANCE OF THE STUDY
!his study is done primarily to fully understand the underground economy as potential ta$payers Most of the underground economy may &e Marginal Income )arners 3MI) &ut, there are a lot of sections of the underground economy that when su&*ected to ta$ation, will &e a great contri&utor and e"entually the foundation of our society !his study study is signi signifi fica cant nt to the the rese resear arch cher erss as it e$pan e$pands ds thei theirr knowl knowled edge ge a&out a&out the the underg undergrou round nd economy economy includ including ing their their economi economicc status statuses es Also, Also, in the future future,, when when policies regarding the ta$ation of the underground economy are implemented, those who ha"e &een inter"iewed already ha"e an idea on the amount of ta$ they are entitled to pay
OBJECTIVES OF THE STUDY
!he study seeks to•
know kno w and and anal analy+ y+ee the the capac capacit ity y of the the peop people le in"o in"ol" l"ed ed in the the under undergr groun ound d economy on whether they should &e ta$ed or not 2
•
collat collatee progra programs5 ms5pol polici icies es of the 'ureau 'ureau of Intern Internal al (e"enue (e"enue 3'I( 3'I( regard regarding ing underground economy, and if none, e$plain why the 'I( has not yet imposed a
• •
policy regarding the ta$ation of the underground economy defend whether the underground economy is capa&le or not in paying ta$es e$plain that the ta$ one pay is &ased on how much he earns, therefore pro"iding an idea idea that that underg undergrou round nd economy economy cannot &e consid considere ered d incapable of paying
•
ta$es present the economic and potential &enefits of the underground economy when properly supported and enriched &y the go"ernment
RESEARCH AND METHODOLOGY • •
• •
research a&out underground economy and its economic situation conduct a sur"ey to our chosen &arangay which is 'arangay 'aranga y 6an (oue, Antipolo 7ity collect the data from the sur"eys answered &y the respondents summari+e, tally, analy+e, and conclude from the gathered data
SCOPE AND LIMITATIONS
!his study focuses on the underground economy as potential ta$payers e will weigh their responsi&ilities, willingness, and capa&ilities to pay ta$es as a citi+en of this country 8sing the updated ta&le for ta$ dues and e$emptions, we will calculate the gross ta$a&le income of single5 and head of the family, married5 with one 31 to 39 children or dependent e will inter"iew 100 respondents who &elong to the underground economy
including street "endors, peddlers, sari:sari store owners, stamp makers, and tricycle dri"ers that are only within 'arangay 6an (oue
DEFINITION OF TERMS International Monetary Fn! "IMF# ;
!he IMF IMF work workss to nurtu nurture re glo&a glo&all growth and economic sta&ility It works with &
de"eloping nations to help them achie"e macroeconomic sta&ility and reduce po"erty2 In$o%e ta& ;
Income ta$ is a ta$ paid on the money that a person or &usiness recei"es as income< !he underground economy is also
Un!er'ron! E$ono%y (
called the shadow economy or the &lack market It in"ol"es the e$change of goods and ser"ices that are hidden from the official "iew !here are "ast sectors under the underground economy that ranges from the street "endors and peddlers, tricycle dri"ers, tutors, online sellers, and e"en drug dealers !he 'I( is responsi&le for the
Brea o) Internal Re*ene "BIR# (
assessment and collection of all internal re"enue
ta$es
fees,
and
charge
and
enforcement of all forfeitures penalties, and fine connected therewith4 MI) refers to those indi"idual whose
Mar'inal In$o%e Earner "MIE# (
gross sales and receipts does not e$ceed P100, 000 CHAPTER II
REVIE+ OF RELATED LITERATURE AND +OR,
2
International Monetary Fund [database on-line]; available from http:!!!"imf"or% & Merriam-Webster (201') [database on-line]; available from http:!!!"merriam-!ebster"#om ' Wikipedia (201') [database on-line]; available from http:en"!iipedia"or%
'
Re*ene 'oal- alrea!y lo.er !e to nta&e! n!er'ron! e$ono%y /
MA=I>A, Philippines 0 !he Philippines# re"ised re"enue targets this year may already &e lower &y more than a third as a result of foregone re"enues from the underground economy, a finance official said 8ncollected ta$es from small neigh&orhood stores, roadside eateries, and am&ulant "endors comprise <9 percent of the country#s uncollected ta$es, .epartment of Finance 3.%F 8ndersecretary ?il 6 'eltran said !he amount may e"en &e higher if it includes foregone re"enues from ta$ cheats, he said, adding that this e$cludes losses posted &y the 'ureau of 7ustoms 3'%7 from smuggling !his may mean that the 'ureau of Internal (e"enue#s collection goal of P@B9 &illion this year may already &e CshortD &y <9 percent, he said !he go"ernment may cut its re"enue goals for the third time this year after it slashed targets &y P92 &illion from its pre"ious PB909 &illion target From Eanuary to May this year, 'I( collections reached P<192 &illion, 1 percent lower than P<<9@ &illion during the same period last year .uring the first fi"e months this year, the go"ernment reported a deficit of P12<2 &illion, more than si$ times the shortfall it posted from Eanuary to May last year !he go"ernment#s intends to collect P
5
GMA Nes !nline (200) [database on-line]; available from http:!!!"%manet!or"#om
5
C'ut the si+e of the ta$ e"asion is largely due to how much of the economy is underground,D he said CGou cannot really collect 100 percent ta$es in an economy where <9 to 40 percent are underground It is impossi&le =o country e"en from the est collects 100 percent ta$es,D 'eltran said 6ingapore, which reportedly has the most efficient ta$ collection system, could only manage a @ percent ta$ collection efficiency .espite these draw&acks, the 'I( has implemented a few measures to lessen the impact of ta$ e"asion 'esides implementing ta$ audits, the agency has also &egun cross matching its data with those of local go"ernment units, 'eltran said Harious programs such as ; (un After !a$ )"aders 3(A!), (un After the 6mugglers 3(A!6, and %plan andado ; are also &eing implemented to further enhance re"enues %plan andado, which closes down esta&lishments that fail to pay correct ta$es, ha"e already reached P0 million in penalties since its launching in Eanuary, 'eltran said Meanwhile, the 'ureau of 7ustoms ha"e &een meeting up to 9 percent of its re"enue targets despite falling imports CIn the first fi"e months, the agency was a&le to collect P20 &illion more than what was e$pected from it,D he said 'ut in Eune, the 7ustoms &ureau posted a P29 &illion shortfall, a deficit that is Cnot alarming,D 'eltran said C?i"en with the le"el of imports, their collection should ha"e dropped &ut they were a&le to ease the drop to a single digit le"el,D he said
*
Manila is looking at a wider &udget deficit of P290 &illion or <2 percent of ?.P instead of the re"ised P12 &illion or 29 percent of ?.P due to the deepening impact of the glo&al crisis
BIR Tar'et- Mar'inal In$o%e Earner- 1
%nce again, the 'I( 3'ureau of Internal (e"enue intensifies its campaign on their ta$ collection, this time targeting Marginal Income )arners 3MI)s like sari:sari storeowners, farmers, fishermen, and others In their latest memorandum circular, the 'I( reminded concerned indi"iduals that while MI)s ha"e &een en*oying certain pri"ileges under the law, they must still comply with se"eral ta$ and ta$:related reuirements such as to pay the income ta$ 'ut 'I( clarifies that MI)s are e$empted from the "alue:added ta$ and from the &usiness ta$ 6i$ty percent of the national go"ernment#s re"enues come from the re"enue collection of the 'I( >ast year, 'I( failed to hit its target of P129< trillion Furthermore, the go"ernment loses a&out P490 &illion a year due to ta$ e"asion !he issuance of the circular was part of the 'I(#s ta$ campaign, under which it aims to plug leakages from ta$ e"asion and to &oost state coffers 6ince she assumed to power in mid of 2010, 'I( 7ommissioner im 6 Eacinto: enares has stepped:up her campaign in the (un:After:!a$ )"aders 3(A!) program 'I( has already filed more than 200 cases &efore the .epartment of Eustices 3.%E 6ome of the cases ha"e already reached the 7ourt of !a$ Appeals and the 6upreme 7ourt has decided others enares has &een "ery +ealous in running after ta$ e"aders including professionals like doctors and lawyers, cele&rities, local and foreign companies, &ig &usiness owners, and last year e"en our People#s 7hamp Manny Pacuiao enares spares no one, howe"er, many people are surprised &y this new circular targeting the MI)s In 2011, 6enator (alph (ecto asked 'I( for fair treatment and e$treme caution from their C%plan andadoJ in disciplining esta&lishments since some of them could &e micro, small, and medium enterprises 3M6M)s (ecto said while the 'I(#s +ealousness *
+onsi " errano, "abayan Weekly (201') [database on-line]; available from http:!!!"aba$an!eel$"#om
.
in running after ta$ delinuent is commenda&le, the 'I( should &e circumspect in deciding which erring store should &e shut down or not e further e$press his o&ser"ation &y saying, CIn the latest &atch that was shut down &y the 'I(, most of them could ualify under the M6M)s sector, which is the su&*ect of protection &y our e$isting lawsJ As of this writing, the commitment of (ecto to file a &ill that would strengthen two e$isting laws for M6M) or MI)s which are (epu&lic Acts 3(As 1@B and 901, that pro"ide some incenti"es to M6M)s like minimum wage e$emption, access to cheap loans and formal trainings !hat &ill that he#s going to file will further strengthen the two laws &y granting more incenti"es to M6M)s such as income ta$ holidays, e$emption from 'I( and "alue:added ta$ 3HA! registrations and ta$ &reaks for e"ery two new workers hired 8nder e$isting laws go"erning the operations of M6M)s, a micro:&usiness enterprise should ha"e a total asset of up to P< millionK a small enterprise, P<1 million to P19 millionK and, the medium enterprise should ha"e assets worth &etween P191 million to P100 million Meanwhile, Fisherfolk group Pamalakaya condemned the plan of the 'I( to ta$ small fishermen and other marginal income earners Pamalakaya further said that the 'I( wants small fishermen to pay ta$es more than the 12 percent )$panded Halue Added !a$ which they pay for e"ery liter of gasoline or diesel they &uy for their motori+ed &oats and for the 12 percent )HA! they pay for e"ery kilo of rice they &uy to feed their family Pamalakaya "ice chairperson 6al"ador France said, C)ach fisherman in this country can no longer feed his family three times a day due to the rising cost of production coupled with 12 percent )HA! and high prices of &asic commodities due to the same regressi"e ta$ scheme put on commoditiesJ e further e$plained &y saying, C)"ery small fisherman pays the go"ernment a total of P@2 in )HA!, and now the go"ernment wants to ta$ the remaining P90 for state income !his is horri&le, shocking and re"olting to the highest orderJ (ick Fulgencio, 7hairman of 6top 7orruption Philippines said, Ce don#t ha"e any issue on the ta$ &eing le"ied &y the go"ernment to e"ery Euan and Euana 'ut the pro&lem here is that it seems that there is selecti"e application on ta$ation I still ha"e yet /
to see rich and famous person to &e *ailed for ta$ e"asion 7ome to think of it, if all the ta$es &eing collected are utili+ed properly, e"ery working person would &e gladly gi"e his or her share 'ut the pro&lem here is we ha"e P.AF or .AP scandal which the go"ernment needs to resol"e If there is no scandal such as this and then there is a law that protect our M6M) or MI)s, why run after the small fries 'I( should catch the &ig fishes and sol"e the corruption in their agency &y not &eing selecti"e in their targetJ
BIR ta2- tel$o- to )erret ot nta&e! 3o%e04a-e! $all $enter- 5
MA=I>A : !he 'ureau of Internal (e"enue will enlist the help of telecom companies in cracking down on unta$ed home:&ased call centers 7ommissioner im Eacinto:enares said the &ureau will ask telcos for a list of residential customers who maintain high &andwidth connections !he list would ena&le the agency to determine whether there are home:&ased call centers among them and whether they are 'I(:registered 7all center operations reuire high &andwidth allocations, stand&y connections as well as 245@ technical support ser"ices to ensure optimum uality and smooth operation in dealing with clients a&road De will coordinate with telecom companies to &e a&le to go after these home: &ased call centers which may not &e paying the right ta$es,D Eacinto:enares said 6he said the &ureau will seek the help of Internet ser"ice pro"iders in ascertaining the status of these &usinesses insofar as ta$ compliance is concerned D%f course all call centers would need high &andwidth Internet connection to &e a&le to operate e will use whate"er method that is legally a"aila&le,D she added Andrew (o*o, a manager at one of the country/s top &usiness process outsourcing companies, said setting up of call centers at home is one of the industry/s ma*or challenges .
atrina +ennen " alde, InterAksyon (2012) [database on-line]; available from http:!!!"interas$on"#om
DIllegitimate call centers are multiplying un&elie"a&ly !hey are a&le to get clients a&road since the ser"ices they offer are way cheaper as against those who are holding themsel"es out in pu&lic as call centers,D (o*o said D!hey also get to recruit employees for two reasons- the hiring process is more rela$ed and that most of the time, employees get to take home their entire pay without any withholding from their employers,D he added !he Philippines is the world/s leader in the )nglish "oice 'P% &usiness with a < percent market share %f the L11 &illion generated in 2011 &y the country/s I!:'P% industry, P@4 &illion came from the "oice segment
BIR .ant- online -eller- to 2ay ta&e- 6
MA=I>A, Philippines : !he 'ureau of Internal (e"enue 3'I( said it will start collecting ta$es from indi"iduals and &usinesses selling products online as part of its aggressi"e efforts to meet collection goal and &oost go"ernment re"enues !he 'I( issued a new memorandum which reiterates online sellers# o&ligation to pay ta$es 7iting the =ational Internal (e"enue 7ode, Internal (e"enue commissioner im enares said failure of online sellers to register with the 'I( would result in the imposition of appropriate penalties enares said the law reuires the issuance of receipts &y online sellers for e"ery sale of goods and properties or e$change of ser"ice !he receipt must &ear the full amount of the sale to the &uyer 8nder the rules, online sellers must secure the reuired Authority to Print 3A!P in"oices and register &ooks of accounts for use in &usiness either manually or electronically /
3innia 4" ela 6e7a, #he $hilippine %tar (200&) [database on-line]; available from http:!!!"philstar"#om
10
!he receipt, the 'I( said, must &e prepared at least in duplicate, the original to &e gi"en to the &uyer and the duplicate to &e retained &y the seller as part of the latter#s accounting records %nline sellers are also reuired to file and pay applica&le ta$ returns on or &efore the due dates as well as su&mit a summary list of sales5purchases including the payees enares said the e$isting ta$ laws and re"enue issuances on the ta$ treatment of purchases 3local or international of goods 3tangi&le or not shall apply to all transactions wherein consumers directly &uy goods or ser"ices from a seller and an intermediary or third party o"er the Internet !herefore, those using online social networks such as Face&ook must register as a ta$payer Among the popular online &uy and sell we&sites include sulitcomph, ayosditoph, ali&a&acom, and tsikotcom, etc Also co"ered &y the rules are those that use the Internet to deli"er marketing messages to attract potential &uyers and those that conduct online auctions 3such as e&ayph Aside from issuing official receipts, online merchants or retailers are mandated to issue acknowledgement receipt to the credit card company or payment gateways for the amount recei"ed !hey must also pay the commission of credit card company net of 10 percent e$panded withholding ta$ Payment gateways which refer to &anks, credit card companies, financial institutions, and &ill paying ser"ices are similarly reuired to issue "alidated &ank deposit slips in the name of the merchant or intermediary and remit the amount to the merchant less )$panded ithholding !a$ 3)! of one half of one percent Freight forwarders and online we&site administrators are likewise reuired to issue the 'I( registered %( for the ser"ice fees paid &y the merchant or ad"ertisers According to the 'I(, the merchant5retailer is o&liged to pay the online ad"ertising entity for the ad"ertising fee, net of two percent )!
11
Sari0-ari -tore-7 Carin!eria7 an! ot3er Mar'inal In$o%e Earner- M-t Re'i-ter .it3 BIR 8
!he 'ureau of Internal (e"enue recently issued Me%oran!% Cir$lar No9 50 :;<=, clarifying the issues relating to the registration and ta$ compliance reuirements of
Marginal Income )arners 3MI) !he circular pro"ides that an MI) refers to an indi"idual not deri"ing compensation as an employee under an employer:employee relationship &ut who is self:employed and deri"ing gross sales or receipts not e$ceeding P100, 000 in any 12:month period Moreo"er, the acti"ities of such MI) should &e principally for su&sistence or li"elihood !he term includes, &ut not limited to, agricultural growers5producers 3farmers5fishermen selling directly or indirectly to ultimate
consumers,
small
sari:sari
stores,
small
carinderias
or Cturo:turosJ,
dri"ers5operators of a single unit tricycle, and such, &ut shall not include licensed professionals, consultants, artists, sales agents, &rokers and others similarly situated, including all others whose income ha"e &een su&*ected to withholding ta$ MI)s are reuired to register with the 'ureau using 'I( Form 101, register their 'ooks of Accounts 3eg two:column *ournal or other simplified &ooks for daily e$penses and re"enues, and issue registered principal receipts5sales in"oices as prescri&ed under (M% 12:201<
Manila 2lan- to ta& -tar*in' )i-3er%en <;
MA=I>A, Philippines !he Philippine go"ernment is set to impose more ta$es on marginali+ed sectors, including &ut not limited to su&sistence fishermen who could hardly feed their families three times a day due to small income A national federation of small fishermen in the country had assailed the plan of 'ureau of Internal (e"enue to ta$ small fishermen other marginal income earners .ismissing the plan as Cheartless, &i+arre, &rutal and e$tremely cruel, the fisherfolk alliance Pam&ansang >akas ng ilusang Mamamalakaya ng Pilipinas
tt$" 8red 6amaos, AttyAtWork (201') [database on-line]; available from http:att$at!or"#om 10 9err$ lbert Corp and 9loria +adonna elarde, $amalakaya-$ilipinas (201') [database on-line]; available from http:pamalaa$a!eb"!ordpress"#om
12
3Pamalakaya said that despite the poorest sector in the country is found along the country#s coastal areas, the ta$ agency still wants su&sistence fishermen to pay ta$es more than the 12:percent )$panded Halue Added !a$ 3):HA! they pay for e"ery liter of gasoline or diesel for their motori+ed &oats A fisherman also shoulders the 12: percent )HA! they pay for e"ery kilo of rice they &uy to feed their family C)"ery fisherman in this country can no longer feed his family three times a day due to rising cost of production coupled with 12 percent )HA! and high prices of &asic commodities due to the same regressi"e ta$ scheme le"ied on necessities And here is the Auino administration courtesy of the e"er cruel 'I( 7ommissioner im enares working on to ta$ our poor fisherfolk#s P 90 daily income If that is not 6atanic, then what is it An act sent from hea"en a&o"eJ said Pamalakaya "ice chairperson 6al"ador France in a press statement !he Pamalakaya official said a small fisherman used to pay daily ta$es in the form of e$panded "alue added ta$ e said for an a"erage of 9 liters of gasoline or diesel they used for fishing, they pay the national go"ernment some P0 pesos in ta$es France said aside from )HA! on petroleum products, a fisherman consumes three kilos of rice for his family and that constitutes P12 per day in total ta$es paid to the go"ernment in the form of the contro"ersial )HA! C)"ery day a small fisherman pays the go"ernment a total of P@2 in )HA!, and now the go"ernment wants to ta$ the remaining P90 for state income !his is horri&le, terrifying and re"olting to the highest order,J added France Pamalakaya said the go"ernment is in"iting a ma*or political uphea"al from the affected sectors if President 'enigno 6imeon Auino will still insist in ta$ing the poor C !he proposed 'I( measure to ta$ the star"ing pu&lic is an open in"itation to war If Mr Auino and the ta$ dictator enares want war, we will gi"e them war,J said Pamalakaya !he group meanwhile, urged the 6enate and the ouse of (epresentati"es to legislate a law that would stop MalacaNang from pursuing this itler like mo"e to &urden the poor pu&lic with more regressi"e ta$ measures
1&
C!he lawmakers are legally and morally o&liged to stop this ta$ madness from the ta$ madmen of the Auino syndicate in MalacaNang,J the group added !he 'I( said aside from small fishermen and farmers, owners of small Csari:sariJ 3"ariety stores, single:unit tricycle operators and other marginal income earners 3MI)s will &e reuired to pay ta$es 8nder (e"enue Memorandum 7ircular =o @:2014, the 'I( argues that MI)s are lia&le to pay the income ta$, &ut are e$empted from the "alue:added ta$ and from the &usiness ta$ !he MI)s are defined in the circular as indi"iduals who are self:employed and earning not more than P100, 000 in any gi"en 12:month period !heir incomes are considered mainly for su&sistence !he ta$ authority said the MI)s may also include owners of small carinderia or turo:turo, and other micro:entrepreneurs !hey e$clude licensed professionals, sales agents, &rokers, artists and other professionals whose incomes are su&*ect to withholding ta$ !he issuance of the circular was part of the 'I(#s ta$ campaign, under which it aims to plug leakages from ta$ e"asion and to &oost state coffers In a complementary circular, =o B:2014, the ta$ authority said indi"iduals who ha"e claimed to ha"e e$emptions from certain ta$es should secure certification from the 'I( for such e$emptions !he 'I(, which accounts for at least 0 percent of the national go"ernment#s re"enues, is tasked to collect P14 trillion in ta$es this year In 201<, it was e$pected to ha"e posted at least a 10:percent year:on:year growth in collection although it was seen to ha"e fallen short of its target of P129< trillion According to rough estimates, the go"ernment loses a&out P490 &illion a year due to ta$ e"asion
CHAPTER III
1'
OBJECTIVES AND STRATEGIES
In order to accomplish this thesis within the limited time gi"en, we used the different strategies stated &elow-
1 Re-ear$3in' ; 'efore we conduct our thesis, we agreed to research first a&out the underground economy in order to ha"e a forehand knowledge to &e a&le to go through this thesis It helped us in creating our own o&*ecti"es and fully understand the significance of our study 2 Sr*eyin' ; e cannot resol"e the pro&lem if not for sur"eying 100 respondents from the underground economy e were gi"en only three 3< days to conduct our sur"ey and each day, our target respondents are << e roamed the streets along the Immaculate 7oncepcion Parish and the streets going to >oreland Farm (esort and 'osay (esort e chose this places &ecause there are three 3< other groups conducting a sur"ey at the same time and a lot of the people in the underground economy along certain areas of 'arangay 6an (oue do not like to &e sur"eyed more than once e tried different styles of approaching our chosen respondent e used the words good morning/ afternoon po and excuse me po < Tallyin' ( e did the tally uickly &ut certainly A group mem&er reads the sur"ey while the group leader organi+es the data through charts !he other group mem&er makes sure we do not miss an information 4 Pre2arin' t3e Po.erPoint 2re-entation )or or !e)en-e ( After going through the process, we prepared our PowerPoint presentation that we will &e presenting on our defense e made sure that all of the informations we stated in our presentation were made clear
CHAPTER IV
15
FINDINGS SURVEY FORM
?ood dayO e are fourth year students from I>> 6chool of Antipolo, Inc %ur group is conducting a sur"ey in partial fulfilment of our pro*ect in Araling Panlipunan Gour answers will &e a huge contri&ution for our thesis indly put a check mark 3 inside the &o$ 3 and fill in the &lanks =ame- QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
Age-QQQQQQ
>i"elihood- QQQQQQQQQQQQQQQQQ ow many years in this kind of li"elihood-QQQQQQQQQ 7i"il 6tatus-
6ingle 6ingle and head of the family Married with how many children QQQQ Age-QQQQQ
.aily income-
@0 pesos &elow @0:100 pesos
Amount-QQQQQQQQQQ
100:200 pesos
400:900 pesos 900 pesos a&o"e
200:<00 pesos
<00:400 pesos
Amount-QQQQQQQQQQQ
Is your daily income enough for your daily e$penses
Ges =o
.o you think you are capa&le of paying ta$es &ased on your income %o In your opinion, does the underground economy need to &e ta$ed hy
1*
indi
QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
If you answered no to the uestion a&o"e, do you think its fair QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
!hank you "ery muchO
SURVEY FORM (Filipino)
Magandang araw poO ami po ay mga mag:aaral sa ika:apat na taon ng I>> 6chool of Antipolo, Inc Ang amin pong grupo ay nagsasagawa ng isang pagsisiyasat &ilang &ahagi ng aming proyekto sa Araling Panlipunan Ang inyong mga sagot ay napakahalaga sa amin sapagkat malaki ang maitutulong nito sa aming pagsasaliksik Maaari lamang po na lagayan ng tsek 3 ang kahon 3 at punan ang mga patlang Pangalan- QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
)dad-QQQQQQ
!ra&aho- QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ Ilang taon ng nagtatra&aho-QQQQQQQQQ
7i"il 6tatus-
6ingle 6ingle and head of the family 1.
Married with how many
children QQQQ Age-QQQQQ
ita kada araw-
Mas ma&a&a sa @0 pesos @0:100 pesos
Amount-QQQQQQQQQQ
100:200 pesos
200:<00 pesos
400:900 pesos Mas mataas sa 900 pesos 6apat &a ang kinikita mo kada araw
<00:400 pesos
Amount-QQQQQQQQQQQ
%o indi
6a tingin mo, kaya mo &ang mag&ayad ng &uwis &ase sa iyong kita %o
indi
6a iyong palagay, dapat &ang patawan ng &uwis kayong mga nasa underground economy 'akit QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
Patas nga &a kung patawan ang underground economy ng &uwis QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
Maraming 6alamat poO
1/
8sing the ta&le &elow, we calculated the euita&le amount of ta$ of e"ery indi"idual to &e paid for one whole year
I) ta&a4le in$o%e i->
Ta& !e i->
=ot o"er P10, 000
9R
%"er P10, 000 &ut not o"er P<0, 000
P900 S 10R of the e$cess o"er P10, 000
%"er P<0, 000 &ut not o"er P@0, 000
P2, 900 S 19R of the e$cess o"er P<0, 000
%"er P@0, 000 &ut not o"er P140, 000
PB, 900 S 20R of the e$cess o"er P@0, 000
%"er P140, 000 &ut not o"er P290, 000
P22, 900 S 29R of the e$cess o"er P140, 000
%"er P290, 000 &ut not o"er P900, 000
P90, 000 S <0R of the e$cess o"er P290, 000
%"er P900, 000
P129, 000 S <2R of the e$cess o"er P900, 00
ith the following e$emptions-
6ingle5 and head of the family
P90, 000
For each married indi"idual
P90, 000
)"ery child or dependent not more than 21 P29, 000 years old and not e$ceeding 4 in num&er
1
arampatang &uwis na &a&ayaran para sa isang &uong taon kung sakali 3Equitable amount of tax to be paid annually)-
a 6ingle56ingle at head of the family5Married ,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang P1, @00 P1, @00 ; P, @00 P, @00 ; P1<, 000 P1<, 000 ; P20, 900 P20, 900 pataas
& Married with 1 child ,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang P2, 90 P2, 90 ; PB, <90 PB, <90 ; P19, 900 P19, 900 pataas
c Married with 2 children ,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang P400 P400 ; P4, 00 P4, 00 ; P10, 900 P10, 900 pataas
d Married with < children 20
,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang ; P1, 400 P1, 400 ; P, 290 P2, 900 pataas
e Married with 4 children ,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang ; P900 P900 ; P2, 900 P2, 900 pataas
f Married with 9 children ,ita ?a!a ara.
B.i- ?a!a taon
(Daily Income)
(Tax to be paid every year)
Mas ma&a&a sa P@0 P@0 ; P100 P100 ; P200 P200 ; P<00 P<00 ; P400 P400 ; P900 P900 pataas
alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran alang &uwis na &a&ayaran anggang P290 P290 pataas
21
SURVEY FINDINGS
22
2&
2'
After we ha"e tallied the sur"eys we ha"e conducted from 100 respondents and concluded the results, we found out that most people from the underground economy think that they cannot afford to pay ta$es if e"er they get in"ol"e into ta$ation !heir primary reason is that the products they are selling already has Halue Added !a$ or HA! when they &ought them Furthermore, they earn *ust enough income to support their needs !his reason is common to our respondents who ha"e a lot of mem&ers in their family and if they#re the sole workers of their family owe"er, a large num&er of our respondents told that they earn an amount of 900 pesos and up e found out that most people from the underground economy are willing to get ta$ed if e"er the go"ernment will mandate them to do so %ur respondents &elie"ed that since it is mandated, it will lea"e them no choice &ut to cooperate instead of uestioning the go"ernment
ANALYSIS
As our studies go further, we learned that most people from the underground economy could not e"en satisfy their needs e found out that most of the underground economy are willing to pay ta$es if e"er it will &e imposed in order to contri&ute to the 25
de"elopment of our country &ut, the pro&lem still lies on their capa&ility 'ased on our findings, the underground economy could ha"e &een a huge contri&utor to the Philippines# re"enue if paying ta$es will not &e a &urden to their economic life owe"er, if the go"ernment imposed a law regarding the ta$ation considering all kinds of the underground economy, they will not do anything a&out it rather pay &ecause it is mandatory e uote, C Doble-kayod na lang.J
CONCLUSION
e therefore conclude that•
!he underground economy must &e ta$ed, &ut, with consideration and e$emption to those Marginal Income )arners or MI)
•
7ertain sectors of the underground economy are not capa&le of paying ta$ )g peddlers and street "endors
•
Most of the underground economy are willing to pay ta$es &ut they are incapa&le
RECOMMENDATIONS
!o the go"ernment, we recommend that those in the underground economy whose annual income e$ceeds P100, 000 following the 'I(#s memorandum, must &e ta$ed !his will &e done &ecause we saw that those who earn more than what they need are willing to pay ta$es &ecause then again, the ta$ one pays is &ased on how much he earns therefore pro"iding them an idea that they are capa&le e presented those people the ta&le of euita&le ta$ to pay annually !hey know to themsel"es too, that paying ta$es are their responsi&ility as a citi+en, of this country
2*
BIBLIOGRAPHY
http://www.encyclopedia.chicagohistory.org/pages/!"#.html http://www.gmanetwork.com/news/story/$%##%/economy/re&enue-goals-already-lowerdue-to-untaxed-underground-economy http://www.interaksyon.com/business/'((!$/bir-taps-telcos-to-ferret-out-untaxed-homebased-call-centers http://www.philstar.com/business/!#/#"/!'/!$*$/bir-wants-online-sellers-pay-taxes http://attyatwork.com/sari-sari-stores-carinderia-and-other-marginal-income-earnersmust-register-with-bir/ http://pamalakayaweb.wordpress.com/!#'/#!/$/manila-plans-to-tax-star&ing fishermen/+more-%"! http://www.kabayanweekly.com/!#'/#!/!'/bir-targets-marginal-income-earners/ http://www.imf.org/external/about/o&er&iew.htm http://www.merriam-webster.com/dictionary/income,!#tax http://en.wikipedia.org/wiki/ureauofnternal0e&enue12hilippines)
GLOSSARY Brea o) C-to%- ( 2.
!he 'I( is responsi&le for the
Brea o) Internal Re*ene "BIR# (
assessment and collection of all internal re"enue
ta$es
fees,
and
charge
and
enforcement of all forfeitures penalties, and fine connected therewith11 DAP ( !e2en!ent –
A dependent means a legitimate, illegitimate, or legally adopted child that is dependent upon or and li"ing with the ta$payer and must not &e more than twenty: one 321 years old
E&2an!e! Vale0a!!e! Ta& ( E&2an!e! +it33ol!in' Ta& "E+T# ( In$o%e ta& ;
Income ta$ is a ta$ paid on the money that a person or &usiness recei"es as
International Monetary Fn! "IMF# ;
income12 !he IMF works to nurture glo&al growth and economic sta&ility It works with de"eloping nations to help them achie"e macroeconomic sta&ility and reduce po"erty1<
%ar$oe$ono%i$ ( Mar'inal In$o%e Earner "MIE# (
MI) refers to those indi"idual whose gross sales and receipts does not e$ceed
P100, 000 Mi$ro7 S%all7 an! Me!i% Enter2ri-e- "MSME# ( O2lan ,an!a!o ( Priority De*elo2%ent A--i-tan$e Fn! "PDAF# ( re*ene ( Rn A)ter Ta& E*a!er- "RATE# ( Rn A)ter t3e S%''ler- "RATS# ( ta& e&e%2tion ( !he underground economy is also Un!er'ron! E$ono%y ( called the shadow economy or the &lack 11
Wikipedia (201') [database on-line]; available from http:en"!iipedia"or% Merriam-Webster (201') [database on-line]; available from http:!!!"merriam-!ebster"#om 1& International Monetary Fund [database on-line]; available from http:!!!"imf"or% 12
2/
market It in"ol"es the e$change of goods and ser"ices that are hidden from the official "iew !here are "ast sectors under the underground economy that ranges from the street "endors and peddlers, tricycle dri"ers, tutors, online sellers, and e"en drug dealers Vale0a!!e! Ta& (
2
APPENDICES
STUDENT PROFILE
=ame- .enyle 6 'arlaan ?ender- Male 'irthdate- =o"em&er 12, 1@ 'irthplace- 7a&angan, Tam&ales Address- 'lk @ >ot 4, Henice 6t, Phase 1 Maia Alta, 'rgy .alig, Antipolo 7ity Motto- C?od has a reason for e"erything that happensJ &0
