Documentary of Philippine Taxation and the History of the Bureau of Internal Revenue

Summary

The history of taxation in the Philippines spans from the pre-colonial barter system to modern tax reforms. Early tax collection was based on goods exchanged for protection under tribal leaders. Over time, Spanish and American colonial powers introduced more formalized taxes. Post-independence, the Bureau of Internal Revenue (BIR) was restructured to modernize tax collection. Significant reforms in the 1990s-2000s, such as the Expanded Value Added Tax (EVAT) and Corporate Income Tax Rationalization, were implemented to address fiscal deficits and improve competitiveness. Taxation has remained a critical tool for government revenue and nation-building throughout the country's history.

Takeaways

• 😀 The Philippine taxation system began during the pre-colonial era, with taxes paid through barter, such as crops and goods in exchange for protection from local leaders called datus or rahas.
• 😀 Under Spanish rule, taxation was formalized through various systems like the 'tributo' (head tax) and 'polo y servicio' (forced labor), impacting the local population, especially the natives.
• 😀 During the American colonial period (1898–1946), the Philippines introduced modern tax systems, including taxes on land, excise goods (alcohol, tobacco), income, and bank transactions.
• 😀 The Bureau of Internal Revenue (BIR) was established under the American regime and underwent multiple reorganizations to streamline tax collection and enforcement.
• 😀 The Philippines gained independence in 1946, leading to the reorganization of the BIR, with significant changes in how tax records were maintained and tax collection systems were implemented.
• 😀 Major tax reforms took place during the 1950s and 1960s, including the introduction of withholding taxes and the creation of the tax census division to consolidate financial records of individuals and corporations.
• 😀 In the 1970s, the introduction of a permanent tax account number (TIN) for all taxpayers marked a significant improvement in tax identification and verification systems.
• 😀 The Marcos administration (1965–1986) implemented key programs, such as the Blue Master program to reduce tax abuse and a voluntary tax compliance program to encourage transparency.
• 😀 The 1980s saw the introduction of the Value Added Tax (VAT) system, which aimed to simplify tax collection and make the tax system more equitable, despite initial opposition.
• 😀 The 1990s brought modernization to the BIR through computerization and the introduction of expanded VAT laws, aimed at addressing the fiscal deficit and improving government revenue collection.
• 😀 The 2000s saw additional tax reforms under President Gloria Arroyo, including the expanded VAT law and corporate income tax rationalization, aiming to attract foreign investment and increase government revenue.
• 😀 Under President Duterte, the taxation system was further simplified, with an emphasis on efficient tax collection and funding for key social programs and infrastructure projects.

Q & A

What was the form of taxation during the pre-colonial period in the Philippines?

During the pre-colonial period, taxation was based on a barter system, where goods and services were exchanged instead of money. People paid taxes in the form of crops and goods in return for protection and security offered by local leaders like the datus or rahas.

Who was responsible for collecting taxes during the pre-colonial era in the Philippines?

The local leaders, known as datus or rahas, were responsible for collecting taxes during the pre-colonial period. They ensured the safety and protection of their people in exchange for tax payments.

What were the social classes involved in the taxation system during the pre-colonial era?

Only the timawa, or free people, were required to pay taxes. Slaves, known as orun or oron, were exempt from paying taxes and instead contributed through their labor and services.

What were some key tax reforms introduced during the American colonial period in the Philippines?

During the American colonial period, key reforms included the introduction of land taxes in 1903, the establishment of excise taxes on alcohol and tobacco, and the creation of an income tax in 1914.

How did the Bureau of Internal Revenue (BIR) evolve after the Philippines gained independence in 1946?

After independence, the BIR was reorganized several times to improve tax collection. In 1947, the country was divided into 31 tax inspection units, and in 1952, the BIR created new departments for legal, assessment, and collection functions. A major reorganization also led to the creation of regional offices across the country.

What significant change occurred in the BIR in 1957?

In 1957, the title of the head of the BIR was changed from 'Collector' to 'Commissioner,' marking a shift in the leadership structure of the agency.

What was the impact of the value-added tax (VAT) introduced in the Philippines in 1988?

The introduction of the VAT in 1988 was a significant reform aimed at simplifying tax administration and expanding the tax base. It was part of the structural reforms introduced under the 1986 tax reform program.

What were the major tax reforms during the presidency of Gloria Macapagal-Arroyo?

During Arroyo's presidency, the most notable tax reform was the expanded VAT law of 2005, which increased the VAT rate from 10% to 12%. This reform aimed to generate more revenue to reduce the fiscal deficit. Another important reform was the Corporate Income Tax and Regional Incentives Rationalization Act in 2009, which reduced the corporate tax rate and improved foreign investment incentives.

How did the Philippine government address corruption in the tax system during the 1990s?

In the 1990s, the government launched the 'Wang Lagay' program to curb corruption in tax collection and promote honest and efficient operations within the BIR. Additionally, the tax census division was established to consolidate tax records and enforce stricter compliance.

What was the significance of the Syntax Reform Law (Republic Act 10351) introduced during the Aquino administration?

The Syntax Reform Law (Republic Act 10351) introduced during President Benigno Aquino III's term played a crucial role in financing the government's Universal Health Care program. It restructured the tax on alcohol and tobacco products to increase revenue for public health initiatives.