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Tax evaders, piracy and the intellectual property law
[December 19, 2005]

Tax evaders, piracy and the intellectual property law

(Manila Standard)When the Bureau of Internal Revenue paid a `surprise' visit to the 168 Shopping Mall in Divisoria and discovered that about 90 percent of the tiangge stall owners were in violation of several laws, it didn't discover something new. Unless one has been incarcerated in prison or living in isolation in a monastery or in some remote mountain, and untouched by the flea market boom during the last 10 years or so, one has to know that official receipts are unheard of in such places.

The Greenhills tiangge has been thriving for the past 15 years and, during all those times I considered it advisable to secure some documentary proof of purchase, the best I got were those slips of paper that are readily available in bookstores. I don't think the Greenhills tiangge and how the brisk sales are conducted there are big secrets to anyone. Stalls in Divisoria, not only in the relatively new 168 Shopping Mall, have been observing the same SOP for as long as I can remember.

And we have all been enjoying it -- rich and poor alike, because nonpayment of license fees and sales taxes keep the prices down. It is stupid to assume that the system had been flourishing unmolested because the illegal operations were known only to the poor, illiterate and uneducated who wouldn't know the difference between an OR and a lotto ticket. Okay, that's an exaggeration but you get the idea. The point is, even the middle classes, and the uber rich patronize flea markets. They are very much a part of the current pop culture. It is also a huge chunk of the underground economy.

We all know how these establishments operate and we don't complain because we all benefit from the system. In fact, it is because of that system -- the kind that violates almost every law on taxes and sales -- that Divisoria and all those flea markets have become shopping meccas. Not only that, chances are the tinderos and tinderas in those flea market stalls are not even covered by social security -- still another way of keeping the overhead expenses and, ergo, the retail prices down.

Actually, if we look closely, the flea market system is only an extension of the system by which most wet markets operate. No receipts, no business registrations, tinderos and tinderas are actually houseboys and housemaids -- receiving compensation as such but performing services outside the homes of their amos as though the market stalls are mere extensions of their employers' homes.

Truth is, when we are faced with the choice between buying from flea markets, sans invoices and all, and the swanky shopping malls, we'd normally go where we can get more for our money. That's life. That's reality. Times are hard and we want to stretch our budgets every way we can. It is also very common sense.

The sad reality is that we are not only coddling tax evaders, we are also encouraging smuggling by benefiting from the low prices of smuggled commodities. Only the very stupid have no inkling that all those low-priced Made in China goodies found their way into the flea market stalls after due payment of import taxes and customs duties.

Then, there is the issue of piracy. Most of these smuggled goods are pirated versions of trademarked and copyrighted properties.

Are we all so wrong in patronizing that system? Are we all being selfish in not considering how that system hurts the so-called legitimate economy? Let's consider the issues of low prices of smuggled foreign goods, and trademark and copyright piracy, separately.

In a Dec. 9th report in this paper, Bureau of Customs officer-in-charge Alexander Arevalo was quoted as saying that "the goods coming from China, Taiwan, and South Korea would still end up cheaper compared to locally made products even if the government slaps a 100 percent tax on the imports." As an example, he "cited a 20-piece pack of double AA batteries selling for only P40 or P2 each while a four-pack double AA batteries made in the Philippines costs close to P45 or about P11 each."

First of all, would anyone import anything that is available locally at comparable prices and quality? I don't think anyone would go through the rigmarole of importation under the circumstances. Question is, why should Philippine-made goods turn out to be more expensive? Is it because Filipino businessmen are more greedy that the mark-up on prices is so high while, on the other hand, their counterparts in China choose to earn only a small profit from every sale but make up in terms of volume? Is it because we import raw materials and raw parts at exorbitant prices in compliance with legal niceties like WTO policies?

See, the issue of smuggling has a dimension we rarely look into. We need to look into our own laws, policies and practices to understand why it becomes more profitable to sell imported goods locally. Smuggling cannot be eliminated unless we remove its inherent profitability. And that means locally producing and selling the same goods with comparable quality at comparable prices. Enforcement of antismuggling laws should only be a support mechanism.

What about copyrights and trademarks? Personally, I am a firm believer in intellectual property ownership. I raise hell when my Web log entries, including photos, get lifted and passed off as someone else's. Does it follow that I should sympathize with other `victims' when their copyrighted and trademarked properties are pirated?

I make a distinction. While it is fundamental that he who owns a piece of property exercises dominion over it, I don't think there is anything just in an intellectual property law that allows owners of copyrighted and trademarked properties to make profits to the extent of depriving the public of the beneficial use of their `inventions' or `creations' by making prices so ridiculously high that they become inaccessible to the many.

Let's illustrate. I'm a food blogger. I cook my family's meals, take photos, write something descriptive about the dishes and publish them together with detailed recipes online. I provide information and a form of entertainment out of something I created. And they are there for anyone to read and cook, if they prefer. I charge nothing for the reading and the trying. I own my Web log entries. Check the Intellectual Property Law -- there is a catchall phrase there that protects ownership of just about anything created, including things like Web log entries. And I invoke my intellectual property right because I do deserve credit for my work. I don't deprive anyone of anything save the right to steal, take credit and even make a profit for something that is not theirs.

Now, let's say that Juan invented a machine that converts tap water to fuel that can make vehicles and factory machinery run. Mass production of Juan's invention can end the fuel crisis within a few years. But Juan puts a premium on his invention based on his intellectual property right. He refuses to allow anyone to mass produce it unless at the price he dictates. What should take precedence --Juan's right to strike it rich based on his intellectual property right, even to the detriment of the public, or the right of the many to the beneficial use of his invention?

You know, if we interpret the intellectual property law to support people like Juan, then it becomes a tool for oppression. His capitalistic attitude will clash with the needs of the many and that will breed piracy.

Of course, in determining whether the right to intellectual ownership should take precedence over the `greater good', one has to make a distinction between essentials and nonessentials. I wouldn't dream of claiming that those who pirate brand name jeans and perfumes, for instance, can use the public's right to beneficial use to justify their own evil deeds.

To sum it up, just like the smuggling phenomenon, violations of intellectual property rights should be viewed from a socioeconomic dimension rather than a purely legal perspective. A common problem with many of our laws, really -- they only seek to prohibit and punish. But laws must have a social dimension to be successfully implemented. Sadly, our antismuggling laws and intellectual property law are too protective of capitalists under the status quo. They do not take into consideration the greater good.

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