the estate tax law tortures the bereaving heirs

the estate tax law in the philippines is so stupid. it tortures the surviving love ones of the deceased. in addition to their sorrow due to the passing of their beloved, they are forced to sell a property at a VERY LOW PRICE. the property could possibly be of high sentimental value to the heirs. they have no choice or else they will incur huge penalties that quickly grows to the same value of the property, which renders the property to have ZERO VALUE. 

it can take years to sell a property at a good price. the only way to beat the 25% surcharge is for the bereaving heirs to sell a property at a very low price. OUCH !!! also, most people don't have the money to pay a lawyer to create an extrajudicial or file for administratorship. most people don't have the luxury to take 1 month off from work to gather all the requirements. 

i keep hearing that most politicians are corrupt. i keep hearing that politicians don't care about people and they just run for office to enrich themselves. i don't believe that. i believe there are many politicians who really want to improve society. they are also willing to work together for the greater good even if they belong to different parties. i will prove it by asking some congress persons to propose a bill that goes a little something like this (let's call it the davide-garcia-salimbangon-calderon bill): 

 

WHEREAS, a property of a deceased will need to be marked "inherited" in the title (encumbrance). if the property is partitioned, all partitions will also be marked "inherited" in the title. whenever an "inherited" property is sold, the seller will pay an "inheritance tax" that is 6% of the CURRENT zonal value. this is in addition to the capital gains tax. but no more penalties. 

WHEREAS, after the inheritance tax is paid, the "inherited" encumbrance will be removed. this means a property can be passed on to many generations and be partitioned many times without having to pay any estate tax. the only time an estate tax needs to be paid is when an "inhertied" property is sold. at this point, there is no reason for the seller to not pay the "inheritance tax" because the money already exists.

WHEREAS, with this bill, the government will get more revenues. that's because with the current law, the only feasible way for most heirs to pay the estate tax is to wait for an amnesty, where the computation is 6% of the zonal value at the TIME OF DEATH. if there happened to be high inflation since the time of death, then the government will receive very little.

WHEREAS, this bill can spur economic activity because inherited properties can more easily be partitioned, sold, and used without having to wait for another amnesty that may never come.

WHEREAS, most people are not educated about estate taxes. most people only learn about estate taxes when they want to sell an inherited property many years later. but by then it's too late because the penalties are already the same as the value of the property. at least with the property taxes, you get a delinquency notice from city hall.

(for more of my knowledge bombs, click the "ian's knowledge bombs" banner at the top of this article and choose any article in the table of contents that piques your interest)