Taxing the lawyers

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Monday, May 19, 2014

HE taxman cometh and the lawyers are up in arms.

But did you know that 288 out of the 713 registered taxpayer lawyers in Cebu did not pay income taxes in 2012?

Or that of the 425 who did (pay), 24 claimed that the income taxes they owed the government were lower than 1,000 pesos each?


“One out of 5 lawyers in Cebu and Davao declared less income tax dues than the average public school teacher,” the “shame advertisement” that the Bureau of Internal Revenue (BIR) placed in the Philippine Star on April 30 said. The percentage was worse in Cebu than in Davao, the ad said. “When you don’t pay your taxes, you’re a burden to those who do.”

A registered taxpayer is one who owns or at least has applied for a Tax Identification Number. The BIR maintains a separate Philippine Standard Industry Classification (PSIC) for each business or profession. It is easy to detect the non-payers.

It is possible that a number of those who were reported to have failed to pay their taxes are actually already dead. I do not know how the PSIC updates its records especially with regards to those who have moved their offices to the next world.

But I have to concede that the BIR does have a point in questioning the truthfulness of a lawyer’s declaration that his income is such that he should pay only P170 in
income tax for one whole year.

Don’t get me wrong. I’m not saying that lawyers are rich or are destined to be rich. I learned this lesson rather painfully during the first year of law practice.

I thought that my Certificate of Admission to the Bar was my ticket to wealth until one afternoon within six months after I took my oath as a lawyer, I felt a sharp pain shot up from my shod feet when I stepped on an oven-hot pavement. At that time, I was walking towards the National Labor Relations Commission near Fuente Osmeña for a hearing.

When I looked, I found a gaping hole on the sole of my left shoe. I worked my way
through college and barely had enough for the basic necessities but I never got to wear shoes that had a hole in the sole!

But like the BIR, I find it very difficult to believe that a lawyer could earn so little that the amount due the government from his as income cannot hit more than three figures. Something must be terribly wrong with their billing system if such were the case.

I was shown a list of the amounts paid in 2012 by the attorneys, minus the names and Tax Identification Numbers. Only 227 paid above P10,000; fewer than 50 paid above P50,000. The rest paid between P1,000 to P10,000.

Regional Director Hermeno A. Palamine of the BIR Revenue Region 13, who is also a lawyer, confessed that he was ashamed to see the amount remitted by his colleagues.

Many of them declared income taxes that were well below the amount paid by average public school teacher. He said he will talk to them as a friend.

“I do not want to make enemies,” he told me. “I graduated from a law school in Cebu and many of the lawyers here are my friends.” A shame campaign is farthest from his mind.

But what if they won’t listen? Then he will have no choice but to apply the law, he said. In fact, he has already sent out audit notices to some lawyers who have ignored his call to correct their returns. They are now required to submit their certificates of creditable tax withheld, quarterly income tax returns, monthly percentage tax or VAT returns and books of accounts, among others, to a designated tax examiner.

“I will be patient,” Palamine said. He needs that. I wish him luck.


Published in the Sun.Star Cebu newspaper on May 20, 2014.


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