(Mis)Taxes For Sari-Sari Stores
“A bad beginning makes a bad ending” ~ Euripedes
Laoag City – The slow and tedious, not to mention expensive, processes of registering a business and compliance with tax requirements with the Bureau of Internal Revenue make Teresita* question her decision to open a sari-sari store to augment her husband’s, a tenant farmer, income. For the privilege of operating a sari-sari store, she has to issue official receipts and deal with the BIR every month, for percentage tax** among others.
“Issue an official receipt for every sale even if the buyer didn’t ask for it, but if the sale is below P25 and the buyer didn’t ask for one, then you don’t have to issue a receipt,” the BIR officer emphasized during the tax briefing at the Revenue District Office No. 1 in Laoag City. “If you don’t issue a receipt, you will be fined P10,000! If your customer asked for a receipt and you didn’t give him, that’s a fine of P20,000!” she warned.
“Everything is very confusing,” Teresita told her seatmate at the briefing. “To travel to the city every month to pay taxes, I will spend an additional P184 for public transportation expense,” she added.
Additional transportation expense is not the only additional costs Teresita has to think of is she wants to open a sari-sari store. Not only will she need to pay 3% of her monthly sales to BIR, but she also have to pay for the cost of printing official receipts. For a farmer and a housewife, just the additional P184 in monthly transportation expense is a lot.
Isn’t there an injustice in this tax requirement for sari-sari stores? Is it really fair to ask them to issue official receipts? Is it fair that sari-sari store owners, who are mostly marginal earners, be burdened with monthly tax compliance? Is it fair that people who barely earn enough to buy for their necessities are burdened with additional costs in exchange for the privilege of owning a sari-sari store?
When asked why this so much tax compliance burden for sari-sari stores, the same BIR officer said that the official receipts will help BIR determine if sari-sari stores are truly earning marginally. She added that it is not enough for sari-sari store owners to declare they are marginal earners, but they have to show BIR receipts that they only sold so much.
I understand the country, through the BIR, needs to increase its tax collections so it can improve basic services to the country, but ensuring that all sari-sari stores report their actual sales and requiring them to pay taxes on these sales every month too much of a burden? The combined annual sales of all sari-sari stores in the country couldn’t possibly equal the one year sales of PLDT which, as of 2013, was P 164.1 billions. So isn’t BIR efforts more aptly rewarded if it focuses its efforts in policing the country’s biggest corporations and ensuring that they pay the right taxes?
The cost of ensuring that every single sari-sari store comply with this rule and the additional benefit, increase in tax collections, are clearly not commensurate. Isn’t there a better, less onerous way for the government to collect taxes from sari-sari stores? With the combined brilliance of the people at BIR, I am sure they can think of something.
The tax rules governing tricycle and jeepney drivers and operators are an example of this brilliance. I don’t know how it is in the other parts of the country, but in the boondocks I call home, our neighborhood tricycle driver earns more than the nearest sari-sari store. Why not require sari-sari stores to pay a fixed amount of taxes every quarter? If Teresita is required to pay P750, which is equivalent to a total sales of P25,000, a quarter in taxes, this would still be preferable to spending almost P600 every quarter in transportation expenses for monthly tax compliance.
What is it with sari-sari stores that they are dealt with differently? Could it be that requiring sari-sari stores to issue official receipt with the threat of thousands of pesos in fines if they don’t is a sign of a wider epidemic? Is this the beginning of the slow death of common sense in BIR?
What will be the next result of this slow death of common sense? Maybe, ask the fish vendor at the wet market to issue official receipts, too?
*Not her real name
**Percentage tax is a computed as 3% of total sales and is paid monthly to the BIR
Liza M. Gaspar is a wealth coach and personal finance enthusiast. She also volunteers for the Rotary Club of Makati McKinley (rcmmckinley.org) and the Gerry Roxas Leadership Awardees (grlawardees.org). Engage her in a discussion about anything you fancy at http://www.thegirlninja.com, liza@thegirlninja.com or www.facebook.com/annalizagaspar
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May 8, 2014 at 11:59 am
More on Sari-Sari Store…
I have a neighbor in Southern Leyte who owns a sari-sari store. Every month she travels from Liloan to Maasin Southern Leyte to pay the percentage tax. Her average monthly sales is 2000 pesos (500 pesos per week). Below is our analysis of her monthly financial activities.
Sales (Monthly) 2000
Monthly Profit of about 15% of Sales 240
Less:
Bus Fare : 300
Meals : 200
Percentage Tax : 60
(560) (560)
What is the income of my neighbor? And why BIR cannot see this?
I think paying the percentage tax is okay but the expenses my neighbor has to incur (due to the Bus Fare and other expenses) to pay her percentage tax every month of 60 pesos is really frustrating and a source of sentiments.
My neighbor’s hope is that one day, the 2000 pesos per month sales that will translate to 240 pesos profit per month will gradually make her store bigger as she re-invest her initial capital plus the profit.. but because of the situation above she decided to close it.
I think BIR can make some adjustments to the payment schedules. Why not consider payments for distant barangays or municipalities on annual basis either in 3% of sales or in Fix Amount.
Doing this will not only benefit the tax payers but also the government. Just imagine the office materials and equipment and time that a BIR staff will use to process a 60 pesos monthly payment…not worth.
I am also a small store owner…the only difference is that my tricycle fare in going to BIR is only 8 pesos (but I am also concerned about the payment processing cost). Let us help those who are willing to help the government by paying the taxes. They are willing to pay even if they do not fully understand the reasons.
I also appeal to our BIR Offices to kindly make and provide written explanation of the taxes and penalties to every tax payer instead of verbally telling the tax payers that they will be penalized. It is of great importance that they also understand completely.
To Ms. Henares –
Ma’am, please give us a part of your busy time to see our situation here in the country side.
April 24, 2014 at 11:37 pm
BIR in the first place is mandated to collect taxes to keep the country going which is vital for the subsistence of a nation. While I believe it is very basic and necessary and their role is crucial and laud their tedious efforts, there is a simply rule of of thumb in commensuration in nation building as BIR is just one of them government agencies. There is the DOLE, DPWH, DECS, etc, with its designated roles in nation building. The bigger picture here is the Philippines as nation which is comprised by its citizen and that is you. With each govt institution, it can be simply liked to a human body functioning with each part is important no matter how small or big as to comprise the whole.
The point is all should be functioning cohesively just like a machine, can you imagine if you try to walk with both legs and feet go forward at the same time? It is but stupid and dumb to even trying it as much as trying to give focus only to one part of your body to be the only one moving or excelling. Ask the body builder if only the abs you should focus on to build to give an impression your indeed show a healthy sign of good health. Anyway so much for that body illustration, imagine BIR will be efficient in collecting taxes and be able to almost a 100% be functional as in every Filipino where tax is due or paid is collected. That would be great!!!
So then the nation will have a big coffer. But then again that’s just one of them govt agency we are talking about. But what about the other branches? So is DOLE in hand with DECS able to generate more work for every abled citizen in their commensuarted skills and become a good tax payer since they now have jobs? Is DPWH able to construct farm roads, bridges so produce from the remotes parts of the country be able to reach the market so the farmers, fisherfolks will have no problem marketing their produce in no time? The question here is are the other govt agencies doing 100% as efficient. So as they are all functioning in unison? While there is only one brain that runs the body surely it cannot or should not go against each other or nonethess move individually. It is hard to move if a part of the body is sick or not in condition.
Putting the idea in reality, taxes are collected for the whole citizenry so to uplift the nation, but at the current state of the nation, taxing the marginalized who have yet to recover from the corruption of previous leadership who have lost confidence in paying since it had produce more poor people is sheer madness. It maybe a law so be it, but it has to be inconcgruent to the state of the nations living status, until it had generated more jobs so there be more able tax payers, more infastructure so produce for the ordinary farmers and fisherfolks get to the market the cheapest and faster way, the move will only add fuel to the fire of the people who have yet to see the so called the straight road…