Kada galaw, buwis

The Bureau of Internal Revenue had issued Revenue Memorandum Circular (RMC) 53-2011 which "states that voluntary contributions to the SSS, GSIS, Pag-IBIG and PhilHealth are subject to tax". 

BIR Commissioner Kim S. Jacinto-Henares would later say, explaining the move, that, “It has been observed that the grant of income tax exemption to SSS, GSIS, PhilHealth, and Pag-IBIG contributions in excess of the mandatory contributions is being abused." Hence, any contribution beyond the mandatory premium dictated by the government shall now be considered as an investment and will be treated as a tax-deductible item.

The affected government institutions were quick to respond to this. Their contention was simply that it will affect them in the form of reduced savings, since pretty much everyone treats voluntary contributions to SSS, GSIS, Philhealth, or GSIS as a way of saving for a rainy day. Taxing these will be a great disincentive.

But Kim Henares' opinion is not unfounded, however. That's because there are shrewd businessmen who know how to work the system by placing their profits in tax-exempt vehicles such as premiums to SSS or Philhealth (Tax Avoidance 101). But I believe they are greatly outnumbered by the many who contribute to these corporations solely because they want to save more and avail of the bigger benefits for those who contribute more.

What is my opinion? Well, I'm against government measures which unavoidably rein in savings (as opposed to those which curb expenses but that's another post). We Filipinos are not saving enough and if we are saving, we are doing it the wrong way (by placing it in a piggy bank, of all places, or the bank, two surefire ways of getting trampled upon by inflation). This new memorandum is simply not good in the long run.

What I do worry about is a case of the slippery slope. If the BIR can tax voluntary contributions to these institutions, what will prevent them from, say, taxing us on other areas? I shudder at the thought but a case of triple or even over-taxation may be closer to reality than we think.

As a side note, I'm being taxed every time I receive my salary (income tax), I'm taxed every time I buy goods (VAT), and now I'll be taxed every time I save more than necessary (RMC 52-2011). I'm definitely overtaxed no matter how I see it.