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Micro Enterprise Dilemma

Micro Enterprise Dilemma

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Published by roldanalex
What if, particularly the micro-entrepreneurs, are telling the truth that their ventures are not really earning, or if they are, it is not what the examiners’ calculated as the tax due?
What if, particularly the micro-entrepreneurs, are telling the truth that their ventures are not really earning, or if they are, it is not what the examiners’ calculated as the tax due?

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Published by: roldanalex on Mar 12, 2011
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03/12/2011

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Micro-enterprises need help Government’s regulation particularly putting benchmarks on the income levels that business should

be declaring, make government revenue collectors’ work easier, reduce possible under declaration of resources used in the business, thus increasing the government’s revenue take. The government I can’t argue needs our taxes and good tax collection is not enough, but most importantly the citizen should honestly declare and pay their taxes. It is already a public knowledge that there are businesses that generates at least 3 sets of books of accounts. One is intended to be shown to the banks for loan purposes. Another set which shows the real score of the business operation that are clearly for the owners private eyes only, and the third set, for the government, obviously to reduce their payable taxes. There are many other creative ways that some businesses employ to avoid paying the right taxes. However, the government’s options are very limited. Though they have the power to prosecute erring businesses, but the magnitude of the task to keep track of all businesses is mission impossible. But when you come to think of it, only those capable financially, have the capability to hire people to do the trick and with great certainty, can afford to bribe tax examiners, if they need to. What if, particularly the micro-entrepreneurs, are telling the truth that their ventures are not really earning, or if they are, it is not what the examiners’ calculated as the tax due? This is further aggravated by local governments- that because of the nature of operation of micro-enterprises, with no proper financial records to show, “guessing” the possible profits of these businesses made always a messy process during renewal of business permits and in paying taxes. I am talking about the “micro” enterprises such as sari-sari stores, small shops and the like. They are so plenty that declaring income better than the preceding year is a must so that their business licenses can be renewed. Days ago, a small furniture shop near our community declined my offer to make me a chair as they are about to close their operation. I was wondering because when I looked around his shack, most of the sala sets and cabinets already have written names of those who bought it. The business must be good! He explained to me that that he is forced to sell it cheap because he is closing the shop. His reason, he can no longer afford the taxes and business fees imposed by the government. “I am surrendering my permit to operate,” he said. He claimed that his business is just very small that he could hardly make a good mark up from the wooden furniture his shop produces. He is using cheap woods such as gemelina and waste cuts

from lumber dealers top reduce cost, but still the sales he claimed, continue to decline over the years. ‘The taxmen came to me and demanded that I should declare a profit of P300,000 for 2010” which he asserted is not factual. He claimed that, years ago, he can easily make that money, but now, even cheap alternative furniture like his is not doing well. He noticed the continuing decline of sales about 5 years ago yet, however he was still hopeful that this year his business can make a turnaround, not until the taxmen came. When I talked to him, he is clearly confused where to get the money to pay for his taxes and the renewal of his business permit. Worst, he is not sure what to do with his four helpers who relied on small allowances and free meal for working in his shop. But he has no other recourse, but to bid goodbye to his livelihood. During our discussion, I noticed that even without paying this year’s taxes, his shop is already beyond salvation. He relied on the local moneylenders to finance his materials whenever he receives orders. He said that he wanted to improve his marketing technique, improve the quality of his product, but he just doesn’t know how and where to get assistance. I happen to meet another owner of a small hardware store, and he is facing the same predicament. But he cannot just close his store as this is his only source of income. But we have to pay our taxes. I pity them, but I can’t do anything. I just wonder, what is going to happen to similar micro-enterprises and those who depend from it? They just want to make an honest living that does not rely on anybody but themselves. Sadly, it is the condition and our system that obstructs those ideals. I can say, they are the most responsible citizens in this country. More dignified than the highest taxpayers who were publicly glorified for paying huge taxes to the government – albeit everybody knows that they have different set of financial records? For comments, e-mail to: roldanalex@yahoo.com

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