Two years after Edsa Dos, actors and actresses wore black and took to the streets. Their cry: “No to 10% VAT.” Two years ago, the Bureau of Internal Revenue subjected them, along with other professionals, to a 20% creditable withholding tax on their incomes. This year, the Bureau of Internal Revenue is finally slapping the deferred 10% value-added tax on professionals, which includes showbiz folks, as well as on banks, brokers, doctors and lawyers.

Dolphy

While comedian Dolphy, singer Martin Nievera, and action king Fernando Poe, Jr. may have landed among the top three taxpayers in their industry, their contribution seems unbelievable considering the rates they command in the industry. As a result of dialogues with the government, the Bureau of Internal Revenue has promised to educate the artists on how to properly account for the Value Added Tax. For stars, this means they have to retain accountants on a monthly basis to comply with VAT reportorial requirements. Artists argue that the VAT will be passed on to consumers in the form of higher movie and concert ticket prices. Thus, the measure is supposedly anti-poor. Because of this, Senator Edgardo Angara called on government to stop collecting the expanded VAT.

Thankfully, the Department of Finance did not cave in to the demands of the influential celebrities. Government stands to gain an additional P8.6 billion from VAT collections among professionals. In 2001, 2.1 million compensation income earners – 80% of individual tax filers – paid an average income tax of P31,878 each. Meanwhile, half a million professionals and self-employed individuals not covered by VAT paid an average income tax of P20,446 each. Total income taxes collected from wage and salaried workers amounted to P66.3 billion.