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How can we make paying taxes easier?

The government has been making a push towards making tax compliance easier. The proposed Ease of Paying Taxes bill, for example, seeks to simplify tax compliance by requiring only VAT invoices instead of official receipts, removing the need for payment of annual registration fees, and removing venue restrictions on filing and payment of returns. However, more can be done to make paying taxes easy.

“Aside from automating tax registration and compliance, digital transformation of the tax administration must narrow the gap between those who register, declare or file their taxes correctly and on time, and those who simply don’t do anything at all,” said Abrea.

In his recently published article with the Philippine Daily Inquirer, the Philippine Tax Whiz Mon Abrea explained the concept of pre-populated tax returns. Essentially, prepopulated tax returns are those which have already been filled up by the revenue collection agency. This means that the role of the taxpayer is simply to confirm or, if the data is inaccurate, inform the tax agency of the correction.

As explained, it would be like a credit card bill where the taxpayer would simply check if the tax information and amount due are correct or not.

“Policymakers can influence taxpayers’ behavior in a positive way i.e., filing and paying their taxes correctly and on time, while still respecting their freedom of choice,” said Abrea.

Prepopulated tax returns have already been in use in 83 administrations and 36 out of 195 countries in 2020. In the United States, prepopulated tax returns have been employed by the State of California through their CalFile program.

In these proposed reforms to make tax compliance easy, legislators must also consider implementing prepopulated tax returns. Doing so would be beneficial for all taxpayers, but especially the MSMEs and individual taxpayers. 


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