Tax Morale: What Motivates you to Pay Taxes?

Being the business/tax geek, non-CPA that I am, I stumbled upon this news article today: https://mb.com.ph/2021/01/25/house-panel-oks-ease-of-paying-taxes-act/ I won’t talk about the bill specifically (you can read about it or I’ll write one article in the future on this). What caught my attention though is the term TAX MORALE.

According to an article of the OECD, tax morale is the intrinsic motivation to pay taxes, as most tax systems rely on the voluntary compliance of taxpayers for the bulk of their revenues. In the Philippines, the tax ministry or the Bureau of Internal Revenue rely heavily on what is declared by the tax payer.

There are some findings on where tax morale is higher in OECD’s report.

My Thoughts on Tax Morale

If you read through the findings of OECD, you’ll notice that trust plays a big role — trust in the government, trust on the plans and projects of the nation, trust in the tax institution, etc.

I honestly believe that the BIR is really trying its best to fix things internally and gain taxpayer’s trust again. But in my opinion, there are a lot of things that we, as individuals / business tax payers can do also to help one another boost our economy.

Support Legit Local Businesses: Taking taxes into consideration in our pricing and setting rates can really jack up our prices if we sell products and services. Our products and services may seem more expensive as compared to others who are not paying taxes. If we can, let’s try our best to support those who have legit official receipts and sales invoices even with the price difference.

Understand our Responsibilities as Business Owners and Professionals: When I started a business several years ago, I did not take the time out to understand how taxes work. I did not check on the financial viability of my business, especially when taxes are imputed. This resulted to me having fees and penalties that I needed to pay. At the end of the day, I realized that I was to be blamed for my ignorance. I relied on other people when I carried all of the risk.

Know how taxation works, ask questions and don’t just shove the topic away. It’s better to ask (even if you ask multiple times about the same thing) than to not know how taxes are. If you need to pay Philippine Business taxes, feel free to consult with one of Taxumo’s Accountant Partners: https://www.taxumo.com/taxumo-consult/. At the end of the day, ignorance of the law excuses no man.

Be a Good Example to Other People: It’s so nice to see people posting on social media that they have filed and paid their taxes. To be honest, a lot of people still feel scared to register and file their taxes. Posts like these help a lot. It lessens the fear of not being able to do things legitimately, or probably not being able to sustain the business after legitimizing it.

We need to celebrate business and professional failures. Let’s be supportive of people whose businesses have failed and don’t judge them. Celebrate wins, too! Celebrate things like being able to sustain a career for a few months, getting your first customer, being featured in a vlog or podcast, etc. Those things keep our entrepreneurial spirit alive and help eliminate the fear of all of these uncertainties that businesses bring.

To add to this, paying our taxes is our duty regardless of where the money goes. I brought this up since I’ve been seeing posts of people saying that their money just goes to waste because of corrupt officials. I’ve learned not to generalize. We have really great projects of the government. Some of our fellow Filipinos were given scholarships in schools. Some of our roads and infrastructure are well maintained. And I bet there are many other projects that are actually great and help a lot of people. Paying our taxes, also, (I feel) gives us the right to voice out our opinions if things need to be changed. Wouldn’t you feel like a fraud if you pushed for change and yet you weren’t actually contributing to nation building?

Embrace Technology as an Enabler: Looking at my daughter, I am always amazed at how they can easily understand how to use new apps. learn how to code, play a new online game, etc. They just “get it”. It made me wonder why is it harder for us. Looking around and asking around made me realize that these are just limiting beliefs that stop us. Most of us see a new tax app, and we immediately see how hard it would be for us and expect the learning curve to be steep. What we can do is just shift our mindset a bit and think like a child — be hungry for knowledge and constantly curious.

Be curious about tax apps like Taxumo. Don’t be shy or scared to ask for help (kids always call on Mommy and Daddy for help). Focus on the potential benefits of technology and embrace it.

Taxumo has daily FREE online onboarding sessions for those who want to learn more about filing and paying taxes. You can reserve a slot here: https://calendly.com/consultnow/onboarding

These are some of the things that I feel we could do that would boost tax morale and also help in our own little way boost the economy of our country.

Feel free to share with me what your thoughts are on this.

We can do it, Philippines! 🙂

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