Tuesday, November 26, 2013

PACQUIAO: As Champion, Congressman, and Citizen-Taxpayer

As a boxer, Pacquiao had a job to do, and he did it well.  For his performance he got the adoration of Filipinos, the admiration of millions of boxing fans worldwide, and substantial compensation amounting to millions of dollars.

As a public official or Congressman, his job is to make laws and hold the “power of the purse”.  For this, he obtains a salary, allowances, perks and privileges, and until lately, “pork barrel” allocations amounting to millions of pesos

As both, he should prove to be not just an ordinary citizen but also a model one worthy of emulation.  Like most law-abiding citizens, he is expected to obey all laws, and pay all taxes.

Kim Henares, Commissioner of the BIR also has a job to do.  She has to collect taxes from all Filipino citizens who have taxable income from all sources.  This includes Pacquiao - the Congressman, the boxer, and the citizen-taxpayer.

Pacquiao has had substantial earnings from boxing over a period of time.  Henares, bound by her duty, determined that Pacquiao failed to pay taxes on his earnings.  He claims that he had paid taxes on those earnings to the Internal Revenue Service (IRS) of the United States.

Since there is a Tax Treaty between the U.S. and the Philippines and that both believe in the principle of “no double taxation”, any amount of tax paid by Pacquiao in the U.S. would be a “tax credit” deducted from whatever taxes that he owes to the Philippine government.

So, it is just a matter of proof.  Pacquiao should just show the taxes that he paid to the IRS during the period that is questioned by BIR, and it should substantially reduce if not totally eliminate the taxes due.

Henares says that Pacquiao had two years to show proof.  Like in administrative, legal, and judicial proceedings, there are deadlines for filing, responding, answering, replying, and other processes to meet.

Pacquiao, despite leniency that is not accorded to ordinary taxpayers, failed to show the required documentary evidence within the mandated period.  For this failure, he was assessed tax amounting to P2.2 billion pesos.  I assume it includes interest charges and penalties.

Using the remedies afforded the BIR by law, the bank accounts of Pacquiao were garnished.  According to Henares, the garnishment netted P1.1 million – way below what is due and payable.

For the garnishment, Pacquiao cries foul and “harassment”.  He just earned at least $30 million for his last bout.  He probably earned about the same if not more from each of his bouts in the last few years.

What kind of accountants and lawyers did or does he have?  He certainly could afford good ones.  Right now, they are just dealing with civil tax liabilities.  The case could reach criminal tax violations if not averted on time.

My friends and companeros in the Philippines tell me that the BIR today is very different from that of the past.  Presently, you have a fearless, smart and honest “straight-shooting with a straight arrow following a straight path” Commissioner.  

Be a boxing champion and in her you have an avid supporter!  Be a tax-evader, and in her you face an aggressive collector/fighter!  She could actually knock you out of your senses!

Pacquiao is a pride of the Philippines.  He has brought honor and admiration to our country.  He also brings joy and entertainment to our people and to the boxing world. 

Amidst the devastation brought about by the strong and powerful Yolanda, his latest winning fight against former World Lightweight Champion Rios lifted the spirits of the surviving victims and the sympathizing public.  He and the victims showed to the world that the “Filipino spirit is stronger than any tyPHoon.”

The Yolanda victims, who saw Pacquiao fall to unconsciousness like a fallen hero in an earlier fight, saw him rise again.  For them, they saw in him - hope, recovery, rehabilitation, and redemption.

Pacquiao has to realize that he is now more than just a champion boxer.  He is now a public servant who could be a “champion of the masses” – a situation that could propel him to higher glories. 

As a Congressman, he could actively participate in legislating programs that would uplift the conditions of the masses including the Yolanda victims.

But like the masses that he represents, he must settle his tax problems.  He has sufficient resources now, and definitely in the near future to solve them.  Visiting the Yolanda victims is a good gesture.  Donating part of his boxing earnings for Yolanda relief, recovery and rehabilitation would even be better.  In fact, doing so would actually have positive tax consequences.

He can check with his accountants and/or tax lawyers.  OOPS!

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