On Tax Evasion: They go to crooked politicians, anyway

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The Tax Justice Institute estimated the amount of taxes lost due to tax avoidance for several countries, including the Philippines, using World Bank data on shadow economies (the unregulated, but not illegal part of the market).

TJ Palanca https://www.twitter.com/tjpalanca
10-02-2013

TAX EVASION LOSSES - The Tax Justice Institute estimated the amount of taxes lost due to tax avoidance for several countries, including the Philippines, using World Bank data on shadow economies (the unregulated, but not illegal part of the market). Find out how much the government loses from tax evasion and how it compares to some commonly quoted government numbers.

Public trust issues

Filipinos have an inexplicable love-hate relationship with government. We rely on them for so many critical services, but have enormous distrust for the people running it, and an even greater dislike for becoming one of those people.

This distrust is especially apparent in the tax system, where tax evasion is commonly justified because “it’ll go to crooked politicians, anyway.” Couple this with the “just a little bit” mentality, and you have unregistered businesses, undeclared income, and bribery as but common tricks of the trade for both large multinational corporations and small businesses.

But how much exactly does the government lose from all this? Data from the Tax Justice Institute reveal the impact of the shadow economy - the part of the market that is legal but concealed from the government primarily to avoid paying taxes - on our country’s tax bill. Turns out, it isn’t “just a little bit” (click the image to enlarge):