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Friday, March 29, 2024

Tycoons, taipans and taxes

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This December, the Bureau of Internal Revenue released online the 2014 Top 500 Individual Taxpayers—ranked in amount of taxes paid and in alphabetical order.  So it is easy to find who is who and who paid how much.

Death and taxes have one thing in common.  You cannot escape both.

That’s their only commonality.  In death, a person’s social standing or income easily shows.   A rich man gets a king’s burial while a poor man gets the last rites fit for a pauper.

In taxes, however,  in the Philippines, the person who pays the most taxes is not necessarily the richest.

Jacinto “Jack” Ng is the Philippines’ biggest taxpayer in 2014.   He paid a whopping P280.1 million in personal income tax, 33 percent higher than the P210.3 million paid by No.2, eight-division boxing champion Emmanuel “Manny” Pacquiao.   The “Pambansang Kamao” was the No. 1 taxpayer in 2013, with taxes paid totaling P163.84 million, 64 percent more than the 2013 No. 2 paid, P99.6 million by a certain Juanito Pornuevo Alcantara.

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Economic growth in 2014 was 5.8 percent, lower than the robust 8.1 percent in 2013 and the lowest in three years.  Yet, the country’s major taxpayers paid 14 percent more taxes in 2014 on average than they did in 2013.  That may be a tribute to the vicious and vigorous tax campaign of the hugely unpopular BIR chief Kim Henares.  Despite her ban against Christmas-time visits by BIR on taxpayers, my office kept receiving texts and inquiries from the San Juan RDO whose chief I was told wants to make a departure statement.

Biscuits taipan Jack Ng is the  surprise No. 1 taxpayer.  He was not even in the BIR’s Top 500 Taxpayers in 2013.   He is only the 36th richest Filipino, according to Forbes magazine, with wealth of $275 million, and that is even an overestimate.  I estimate Jack’s wealth at $160 million based on Rebisco’s profits of P576 million in 2014.  The stock market values stocks at 18 times their current profits.

Ng paid nearly ten times more taxes than the richest Filipino, the legendary retailing, banking and property taipan Henry Sy Sr.  Tatang Henry ranks only 53rd in taxes paid, P25.656 million in 2014.

Early in 2015, Sy Sr. was listed by Forbes magazine as the country’s richest individual with an estimated wealth of $14.4 billion, corrected later to $12.3 billion or P581.79 billion at the peso-dollar rate of P47.30 to $1. I estimate Henry’s wealth at $9.6 billion.

Tycoons and taipans have the habit of drawing compensation from their companies in the form of dividends—cash and stock.  Being subject to final tax, cash and stock dividends need not be reflected in a taxpayer’s individual income tax return which the BIR uses in making the ranking.

That may change, however.  Kim Henares has a memo requiring all taxpayers to reflect in their returns all income received during the tax period—salaries, bonuses, cash and stock dividends, gifts and other perks.  Implementation of the memo has twice been postponed.

Because they receive compensation not as cash dividends nor stock dividends, actors, entertainers, and broadcasters get paid in pure salary which is readily subjected to a 32-percent tax if it exceeds P1 million. These people are also very easy to shame or intimidate.  Thus, on a per capita basis, actors and broadcasters pay more taxes than do tycoons, taipans, and CEOs.

Of the 20 top taxpayers, five are actors or entertainers, or 25 percent of 20, a disproportionate ratio.   

The highest-paid actors ranked in taxes paid are: Piolo Pascual P42.53 million, 14th; John Lloyd Cruz P41.97 million, 15th; Kris Aquino P40.48 million, 16th; Sharon Cuneta P39 million, 18th; and Willie Revillame P38.3 million, 20th.   

These five each paid more taxes than  Union Bank president Justo Ortiz (P37.22 million, 21st); Aboitiz conglomerate CEO Erramon Aboitiz (P35.8 million, 22nd); BDO CEO Nestor Tan (P33.5 million, 23rd); Ayala Corp. CEO Jaime Augusto Zobel de Ayala (P32.22 million, 26th);  PLDT/Smart/Metro Pacific Chair Manuel V. Pangilinan (P31.6 million, 27th);  Ayala Land Chair Fernando Zobel de Ayala (P29.69 million, 32nd);  First Holdings and ABS-CBN top honcho Oscar Lopez (P28.54 million, 34th); Metrobank and Toyota Group owner George SK Ty (P26.28 million, 40th); Smart Communications president Napoleon Nazareno (P24.34 million, 43rd);  and ports magnate Enrique Razon Jr. (P22.87 million, 50th).

In fact, Piolo, John Lloyd, Kris, Sharon,  and Wowowie individually paid far more taxes than 99 percent of the country’s richest and CEOs.  Now, that’s not entertaining.

Meanwhile, 50 other taxpayers, astronomically poorer than taipan Sy, paid more taxes than Tatang Henry paid.

They include Jack Ng, followed by No. 2 Manny Pacquiao with P210.305 million taxes, down  from No. 1 in 2013 with P163.84 million in taxes (he is not even in Forbes’ list of 50 richest Filipinos); No. 3 Mercury Drug retailing tycoon and 22nd richest Filipino (per Forbes) Vivian Que Azcona P153.55 million, up from No. 8 with P51.6 million in taxes in 2013; No. 4  automotive tycoon and Palawan Governor Jose “Pepito” Alvarez P73 million, up from No. 7 with P55.62 million in 2013; No. 5 Jack’s son property tycoon Jacinto Jr. P66.86 million; No. 7 Ronaldo Romero Soliman P53.82 million; No. 8 William Shultz P51.32 million; No. 9 San Miguel Corp. vice chair and president, Ramon S. Ang P51 billion; and No. 10 banker Lauro Baja III, P50.74 million.

Ang ranked 12th in tax payments in 2013 with P46.47 million. Baja was 13th in 2013 with P45.19 million.

RSA is closely followed by No. 11, SMC Chair Eduardo “Danding” Cojuangco Jr. who paid P50.48 million in taxes for 2014 apparently after unloading some of his San Miguel holdings. In 2013, ECJ was not among the Top 500 individual taxpayers.

No. 12 is Wharton MBA George Tiu Chua with P49.22 million in taxes paid in 2014; No. 13 Sharon Cuneta P49.11 million; No. 14 Jonathan Ng P45.74 million; and No. 15 Union Bank CEO Justo Ortiz P45.16 million.

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