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MORE SUGGESTIONS ON THE VAP
Nov 9, 2001
 

 Last Tuesday, we suggested, by way of buffing the VAP, the voluntary assessment program of the current administration, that caps be made on the two of three figures (the two figures which are related to a taxpayer’s gross sales) which determines the amount that must be paid by the taxpayer availing himself of the government’s tax amnesty offer.

Other people apparently have also been thinking of how to make the VAP more acceptable. On 22 October 2001, a conference called the Forum on the Macapagal-Arroyo Tax Reform Program was held with, among others, top finance officials, Secretary Lito Camacho and his undersecretary Kune Gison, Congressman Oscar Moreno (one of the more knowledgeable members of the lower house) and Nep Malaluan of Action for Economic Reforms, an NGO, in attendance. During that forum, a broad-based private sector task force, initiated by the Makati Business Club and chaired by MBC trustee and former finance secretary Roberto F. De Ocampo, submitted the results of its consultations on the VAP.

The task force’s main recommendation is to permit the taxpayer to pay the basic deficiency tax due, with interest to run until date of payment but without the usual surcharge of 25%. The taxpayer availing himself of this privilege will not be accorded last priority in audit and investigation.

Under this proposal, the only concession to be given to the taxpayer is stopping the accrual of the interest on the deficiency tax upon payment under the VAP. In return, the government concedes only the 25% surcharge (which the task force maintains should not be enforced in the first place because the situation is not covered by Section 248 of the Tax Code). The government can still audit the VAP taxpayer and, if the deficiency, upon investigation is found to be greater than what the VAP taxpayer had declared, the deficiency payment made when the VAP was taken advantage of, will be deducted from the payment is required upon investigation.

The proposal may be theologically flawless, but, unfortunately, will, to my mind, appeal only to the very righteous. Amnesty is not for those who have done no wrong. It is primarily for those who have been deliberately remiss in paying their taxes. Except for those who did not deliberately pay the right amount and are now with contrite hearts and fear of the Lord burning in their souls, willing to make amends, amnesty is attractive only to those who will gain something more by paying the required amount. "More" than what? More than what they are presently enjoying now, namely, a fragile chance of being able to get away with paying less than what the law requires.

To many of them, the only advantage an amnesty is worth paying for is freedom from the hassles of an investigation. If a tax audit or investigation, despite availment of the VAP, will still be a real possibility, why pay the VAP? One might as well take a chance of paying to the examiner the same, if not a lesser, amount, upon being investigated, if at all.

In my view, it is essential to recognize that, irrespective of how the VAP payment is determined, the true incentive for most amnesty taxpayers is the "peace of mind" promised by the government, translated into, "relief against the inconvenience and unpleasant experience of facing a tax audit". The challenge of our revenue authorities is determining the right price for that peace of mind. Admit it or not, the competing product is also peace of mind, undoubtedly fragile and born in sin, but, in our cultural context, maintained by the binding force of the time-honored honesty among thieves.

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