One of the more critical battles that any cultural institution should be waging at this point is the one against the unjust taxation of freelance cultural workers.
This was one of Daang Matuwid’s most unkind tax policies, which was put into effect by former tax chief Kim Henares, for whom it didn’t matter how much a person earned, what mattered was that government could collect taxes on those earnings.
I had hoped President Duterte’s men would take a look at this tax policy, and realize that freelancers and cultural workers are in a category of employment that is unlike “self-employed professionals” (doctors and engineers and lawyers), and unlike workers who suffer through contractualization.
At the very least, I wished they would declare a tax amnesty, just to bring back freelancers and cultural workers into the tax system, no questions asked, no penalties to be paid for honest but foolish mistakes. It’s just the kinder thing to do.
One still hopes.
Specificity
There was nothing just or kind about the past government’s decision to require freelance cultural workers to file (and pay more) taxes, no matter how little their earnings. After all, if you’re a freelancer, you’re earning on a per-project basis, and you could earn even less than minimum wage if you divide your earnings across the days when no money’s coming in. Freelancers for TV, movie, theater, and print would know this: we are dependent on the gigs that we get. We have no employee-employer relationships, we have no health or social security benefits, we have no company to fall back on in times of need.
Daang Matuwid did not care about the state of (non-)employment of freelancers. Instead, it considered freelancers as self-employed professionals, under which category falls doctors and lawyers with their own practice, architects and engineers who build their own offices. It didn’t matter that a majority of freelance cultural workers earn a fraction of what these self-employed professionals earn.
Of course there are celebrities and models, TV and movie stars, box office film directors and scriptwriters, and some big shot writers who could be earning about as much as those self-employed professionals.
But that’s what the Bureau of Internal Revenue (BIR) is there for, isn’t it? To make distinctions between the different types of earners, and tax accordingly.
Sadly, the freelancer who is barely making ends meet, who is always on her toes wondering about when the next project will come, is being treated like she owns a medical or legal practice. There is absolutely no justice in that.
A taxing process
When I finally got my papers in order – and was able to pay the penalties through the kindness of a good Samaritan who had cash to spare – I realized that one of the things the BIR presumes everyone can afford is an accountant. But I couldn’t afford one, even as I found someone who was only charging P2,000 pesos a month.
When there are months when one earns absolutely nothing, how could one pay an accountant?
I had to learn how to file the monthly taxes (1601E and 2551M), which requires using a computer with a Windows operating system. Yes, that online payment facility still does not work for all computers.
I also realized that even as all the payments I get are after taxes, i.e., there is already tax withheld at source, when I file my earnings for any given month, even if it’s just P5,000 pesos for writing a magazine cover story, I am made to pay an additional 3% in taxes. I then print the form out in three copies, go to the bank, and pay the P150 pesos.
To say that this is time wasted would be an understatement: I could just as well be at home trying to earn my keep by writing. Instead one is in line to pay taxes on earnings that has already been taxed before I even got it.
I dread the annual filing in April, which requires that freelancers like me get Form 2307 from all the places I’ve written for, and which will mean filling up those ledgers.
How? I have no idea. Can I afford an accountant for that? Of course not.
Tax amnesty please!
Since writing about this tax policy of Daang Matuwid, I continue to get emails and Facebook messages from people who are faced with the same crises I faced when I needed to get my receipts and register as freelancer.
Many people would go to the BIR, ready to apply for receipts or make sure they’re registered for the jobs that they currently hold, only to find the past catching up with them, with penalties to boot.
Say, an old business that closed down 10 years ago but which to the BIR remains open because you didn’t know to close its books. Or maybe you got your TIN number for your first job, which would mean being registered as employee, but five years since you’d like to register as freelancer.
In instances like these, the BIR will require the freelancer to pay penalties based on what it calls “open cases.” These are penalties that are counted per month, and when it piles up, it is an amount that will cripple anyone – especially someone who earns minimum wage, or is freelancer.
One hopes that the Duterte government would announce a tax amnesty for workers such as these. At the very least, one wishes that a blanket penalty be set for freelancers and wage earners who did not know to close books, or fix papers the moment their status of employment changed. One hopes the amount is affordable, and will not mean sacrificing one’s salary.
One holds on to the possibility of kindness and malasakit. We all know we could use more of that these days.
Published in The Manila Times, January 26 2017.