The Remittance Tax Scare
How a VAT proposal — of all things — triggers nationalist thoughts, all because of President Duterte
DISCLAIMER: The proposed 12-percent value-added tax (VAT) on remittances, according to Finance Undersecretary Karl Kendrick Chua, applies only to service fees, not the remittance amount. The first part of the story revolved around a presumption but it was clarified in the second half. We recommend reading the feature all the way through.
When the proposal to tax remittances broke in the news, we overseas Filipino workers (OFWs) huddled around the dining table ready to devour the automatic agenda for the night.
First were questions to which we had no answers then: Is it final? How will it work? How big will the cut be? Twelve percent? Twelve percent of what?
Since there was no way to clarify what little information we had, we thought it best to assume the worst. Twelve percent of the remittance amount every freaking time we send money home — no way.
That couldn’t be possible, right?
We scrambled to compute how much will the ‘damage’ be every month; how many hundreds of dirhams will be going to the government each time we pay our Philippine bills. Some scenarios were a lot scarier than the others: What if a hospital emergency comes up and we had to send a hundred thousand pesos in one go? Does that mean they will be having a P12,000 cut?
Things escalated pretty quickly — from sharing a moment of disbelief to planning an actual doomsday survival.
What are we gonna do?
Open a bank account with an ATM that can be used in the Philippines free of charge (yep, there are some). Send the card home.
Swipe that credit card all the way through! Give the Philippine family a credit card extension, then pay the bill in full every month to avoid deadly interest charges.
Save up. Secure all savings in your Philippine bank account. Anyway, the legislation process moves at a crawl; there is still time to tuck away a year’s worth of expenses.
Bring everyone to Dubai.
I’ve almost forgotten that we were actually having dinner — and not preparing for a zombie apocalypse.
Oh, what the Filipino imagination can do to skirt the rules. Going through the whole ordeal of registering collective dissent was not even a considerable recourse.
Saving your own boat was the top priority. And it is not surprising at all. Didn’t most Filipinos leave home to save their families from a sinking ship?
The unthinkable
Remittances, and every government policy attached to it, will forever be a concern for OFWs. We watch the peso’s every dip and every hike — every cent counts.
We slept on all the ideas that night thinking there’s gotta be a better way to send money home when worse comes to worst. Some brilliant mind will be able to figure it out.
But today, I have heard the unthinkable. One sales lady in a home furniture store in Dubai actually said she didn’t mind paying whatever tax President Duterte is planning to levy on her meager P30,000 monthly income.
Never mind the Magna Carta for Migrant Workers. Never mind that the United Arab Emirates will soon be imposing its own five-percent VAT.
“If it is what he thinks is best for the country, then it’s fine. Kung magiging mayos naman sa atin, bakit naman hindi,” 32-year-old Lisa Perea told me in a quick chat, while she was carefully aligning the rows of vases displayed on their store’s shelf.
“Did you know that 12 percent of your remittance of AED2,000 is AED240?” I asked her. And that’s more than enough to buy a month’s worth of rice back home. Lisa is supporting her family of five in Manila, along with her parents.
She thought about it for a moment, did the math in her head, and said, “Well, tingnan natin. Sigurado may magandang dahilan naman si Tatay Digong, at magiging fair naman ang policy para sa atin.”
I was floored. Since when did ordinary Filipinos, even those with nothing more to give, start thinking beyond their families? Since when did they start thinking of taking part in nation-building?
I have known people who have loved the country and the Filipino people more than anything else in the world — we called them heroes. I have been with people who gave up their careers to devote themselves to fighting for the rights of the oppressed.
Today was the first time I have met a Juana who’s just like any of us struggling to make ends meet, but she was ready to surrender a portion of her hard-earned money — to the government, of all people.
I’m pretty sure that if it wasn’t for her “Tatay Digong,” she would have already started the rant about how corrupt politicians are; how there was no hope left for the Philippines.
Mind you, Lisa was not the only one. There were more who thought the same: An entrepreneur, a nurse, a graphic designer, an accountant —expatriates from all walks of life.
I am guessing there are at least 51,879 Filipinos in the UAE who shared her sentiment. Duterte won a whopping 83.5 percent of votes in the country last elections.
We all know of the cold-blooded killings all over the country. We have all been watching the peso slump.
We may call it blind faith — but to be honest, it’s been a while since an ordinary Filipino has actually believed in anyone in power.
We can only just hope President Duterte makes the most of this opportunity. Some people would readily give up whatever they have — their money, their rights — just so he could succeed in whatever “change” he is trying pull off.
He has won not just the presidency but, more so, the heart of the Filipinos.
A clarification
We all know by now that the proposed tax would be in the form of VAT on remittance centers’ service fees. Meaning if we are now paying P200 for every transaction, the tax would be P24.
“I don’t really see the tax having too much of an impact unless the tax is big,” said Gemmy Lontoc, a finance expert and former OFW who has worked for one of the biggest remittance centers in the UAE.
Citing a survey conducted by The Filipino Times, he said Filipinos are the UAE’s most frequent remitters, wiring money about eight to 12 times a year.
“This behavior can off-set the tax and thereby still deliver good remittance levels from the UAE to the Philippines. The UAE is currently third among all countries in terms of remittances to the country and showed good growth and recovery last 2016,” Lontoc said.
So much for the zombie apocalypse survival kit. Our dining assembly burst into laughter upon realizing how over-acting we all were. All of them didn’t mind paying an additional P24 pesos every month.
Lisa, upon knowing this, laughed, too, but then she said: “’Yun lang pala. Hahatiin ko na lang and padala ko sa amin, para P48 naman ang maiambag ko.”
I didn’t know what to say.
Senator Sonny Angara, in a recent Senate ways and means committee hearing, assured expats that no fees will be further charged on remittances.
“We want to clarify this information with our fellowmen abroad that no tax would be imposed on the money they would send to their families here in the Philippines,” Angara was quoted as saying in a local media report.
“We will make sure this won’t be an added burden to our OFWs,” he also said.
I am yet to share the news with Lisa, but I’m pretty sure she won’t be happy about it.
The next time we talk, perhaps it’s time for me to ask her why. What is it in Duterte that makes her see the country differently? What has Duterte done? Rather, what has he done right?
The biggest question of all, Lisa: What has Duterte done that has made your life better now?
That’s an entirely different story.
