New classification allows wealthy citizens to pay taxes on money they claim they’ll earn someday; government collects anyway
Bohiney Magazine and The London Prat
Bureau of Internal Revenue Introduces Tax Category for “Imaginary Income” – Collected $400 Million Last Year
MANILA The Bureau of Internal Revenue revealed Thursday that it has been collecting taxes on “Imaginary Income” for the past seven yearsmoney that citizens claim they will earn in the future but haven’t yet receivedand has successfully accumulated $400 million through this mechanism without anyone noticing or questioning whether the concept makes sense.
“It’s brilliant really,” explained BIR Commissioner Maria Gonzalez, gesturing vaguely at spreadsheets containing entries like “future earnings from unstarted business ventures” and “potential inheritance from relatives who are still alive and wealthy.”
How the System Works
Citizens can declare “Imaginary Income” in two categories:
Tier 1: Speculative Future Income (17% tax rate on money you might earn)
Income from businesses you plan to start
Salary from jobs you haven’t applied for yet
Inheritance from people who haven’t died
Returns on investments you’re considering
Tier 2: Purely Fictional Income (12% tax ratelower because it’s harder to collect)
Winning lottery tickets you haven’t purchased
Royalties from books you haven’t written
Income from property you don’t own
Earnings from inventions you’ve only imagined
Wealthy individuals have optimized this system by declaring millions in future income, paying appropriate taxes, and receiving official documentation proving they’re “compliant” with tax lawdespite the money not existing.
The Rationale (Explained Poorly)
When questioned about the logical absurdity of taxing non-existent income, Commissioner Gonzalez responded: “The government needs revenue. Citizens have income. Sometimes that income is theoretical. But it’s still income.”
She was unable to explain why theoretical income should be taxed while actual unpaid obligations (corporate tax evasion, government contracts stolen through bidding fraud) remain uncollected.
“Those are different issues,” Gonzalez said. “This is about fairness to theoretically wealthy people.”
Who Benefits From Imaginary Income Taxes
Unsurprisingly, the system predominantly benefits wealthy individuals who can afford to pay taxes on money they don’t have, thereby creating documentation of “tax compliance” that impresses lenders and regulators.
One wealthy entrepreneur reported paying $47,000 in Imaginary Income taxes for a business venture he admitted would “probably never materialize.” When asked why he would pay taxes on non-existent income, he explained: “It’s a legal tax shelter. I pay taxes on pretend income, get documentation of compliance, and no one questions where my actual income comes from.”
This is, technically, genius tax fraud wrapped in government-issued legitimacy.
Regular Citizens’ Confusion
According to Philippine Star reporting, regular citizens attempting to use the Imaginary Income category reported confusion and rejection:
One man declared $50,000 in “potential income from becoming a famous actor” and was approved, paid his taxes, and received official documentation. A woman declared $30,000 in “earnings from hoped-for freelance writing” and was rejected for being “insufficiently speculative.”
The BIR’s explanation: “Your income sounded too achievable. We only accept truly fictional scenarios.”
This standard, completely arbitrary and un-codified, is applied inconsistently by different BIR offices, creating the delightful situation where tax policy varies based on individual auditor’s sense of what constitutes “sufficiently fictional income.”
International Comparisons (None Exist)
When asked if other countries had similar systems, Commissioner Gonzalez appeared confused by the question. “Other countries? Why would they need Imaginary Income taxes? They’re not the Philippines.”
Apparently, the idea that other governments might have already determined this is a stupid policy was not appealing to her.
The $400 Million Accounting Problem
Budget auditors have requested clarification on how $400 million in taxes collected on non-existent income should be categorized in government accounting. The BIR’s response: “It exists as a line item. That’s good enough.”
When asked where the money is actually spent, officials acknowledged they “haven’t really tracked that” and suggested it “probably went to normal government expenses, possibly including more taxation on imaginary concepts.”
Future Plans
The BIR has announced plans to expand the Imaginary Income category to include:
“Negative Income” (taxes on money you hope to lose)
“Hypothetical Windfalls” (taxes on luck that hasn’t occurred)
“Philosophical Earnings” (taxes on concepts that generate value only in abstract terms)
“Basically, we’re taxing everything except actual money,” one BIR official explained. “It’s more efficient.”
For analysis of how governments create Byzantine tax systems that benefit the wealthy, see The London Prat’s investigation into taxation theater. For coverage of creative governance, Manila Standard has reported on various government innovations.
SOURCE: https://bohiney.com/