You like nine to five, I’m the weekend
Baby boomers are selfish, Gen Xers are cynical, Millennials are entitled, and Gen Zs are lazy. Each generation seems to enjoy picking on the newest kids at work, depicting them with sweeping, negative stereotypes. These broad generalizations encourage people to dismiss concerns from other generations by rationalizing their problems as generational character flaws.
There is a danger with these depictions: not only can they be self-fulfilling prophecies, but they are thought-terminating caricatures that do not address systemic issues that haunt our workforce. Prejudice might even deter young professionals from accessing opportunities that have already been elusive to begin with.
As Millennials and Gen Z are the highest chunk of online taxpayers on Taxumo, our 2024 State of Online Taxation report will be a deep dive into the beliefs and behaviors of these two generations, analyzing those against their financial performance over the past year. In this report, we will attempt to give readers the bigger picture, pulling information not just from our user base, but also from surveys and reports that have been conducted recently.
They say I come and I go
In a 2023 Rappler survey of 537 Gen Z Filipinos (aged 15 to 26) on work attitudes and spending and saving habits, it was highlighted that many of them find it difficult to achieve financial stability despite working multiple jobs or earning above-average salaries. Key concerns include inadequate wages, high living costs, and the need for better government support. Salary and benefits rank as the top considerations when choosing work, with career opportunities and type of work being distant second and third.
Meanwhile, the Deloitte report entitled “2023 Gen Z and Millennial Survey” reported that 58% of Filipino millennials and 59% of Filipino Gen Zs admitted to living paycheck to paycheck and worry about being unable to cover expenses.
A 2022 paper from the Institute for Labor Studies highlighted: “Globally, the youth unemployment rate was more than three times the adult rate in 2021, with around 75 million unemployed youth out of the 732 million in the labor force. In the Philippines, youth unemployment remained higher than the regional average but reflected a significant improvement in youth employment creation prior to the pandemic. The COVID-19 crisis not only wiped out the progress of providing Gen Zs labor market opportunities but also significantly disrupted the cohort’s quality of employment prospects, income, education, and training.”
In this year’s State of Online Taxation, we will look at the context of this anxiety, starting with the country’s economic performance.
For this year’s State of Online Taxation, we will highlight how Gen Zs and Millennials are faring professionally by looking at key factors, such as:
Growth of online taxes remitted to the BIR
Where are we on the socioeconomic class divide
Online taxpayers in terms of age, city, and industry
How women and non-binary online taxpayers are performing
Unemployment is down – but informal work is prevalent
Last year, the International Monetary Fund (IMF) has forecasted that the Philippines’ GDP for 2023 will peak at 6%. But in the recent PSA report, the actual GDP growth for 2023 only achieved 5.6%, below the government’s annual target.
Source: PSA
Figure 1. Gross Domestic Product (At Constant 2018 Prices)
Year-on-Year Growth Rates (in percent)
Q1 2018-2019 to Q4 2022-2023
Meanwhile, earlier this year, the Philippine government reported a 3.6% drop in unemployment rate, highlighting that, compared to the 2.18 million unemployed Filipinos in November 2022 and 2.09 million in October 2023, there were 1.83 million unemployed individuals in November 2023.
However, non-profit research organization IBON Foundation paints a different picture. In an article published this April, it stated:
“Wages remain low, and many households are struggling to keep themselves afloat, especially with the rising cost of living. As of March 2024, the average minimum wage nationwide is just Php440 or a little over one-third (36%) of the Php1,207 average family living wage (FLW) nationwide for a family of five. The NCR has the largest minimum wage of all regions at Php610, but this is barely half (51%) of the Php1,197 FLW. BARMM, meanwhile, has the worst wage gap, where the Php361 minimum wage is not even one-fifth (18%) of the Php2,053 FLW.
In any case, informality in employment is still prevalent. IBON estimates that there are 20.4 million informal workers, which is 41.6 % of total employed persons as of February 2024. This is comprised of 2.1 million domestic workers, 13.3 million self-employed and 4.9 million working in family-owned farms and businesses (including 3.8 million unpaid family workers). The number of informal workers could be higher if counting the millions of irregular workers in private establishments.”
“Wages remain low, and many households are
struggling to keep themselves afloat, especially with
the rising cost of living."
Tax collections are growing, but still fall short of targets
According to PNA reports, tax collections increased by 8%, bringing 2023’s collection to PHP 2.53 trillion, higher than the 2022 collection of PHP 2.34 trillion. However, BIR collections fell short of the anticipated PHP 2.64 trillion target for 2023.
For this year’s target collection, it is anticipated to reach PHP 3.05 trillion, reflecting an increase of 20.55% from the previous year. To achieve the targeted 2024 collection, tax collections need to maintain a 1.56% month-on-month growth rate.
To date, Php 591.8 billion has been collected for Q1 2024.
Did you know?
There has been new implementations since the Ease of Paying Taxes Act was passed as a law. BIR released a new set of classification for taxpayers which includes the following:
- Micro Taxpayer: Less than PHP 3,000,000 in gross sales.
- Small Taxpayer: Between PHP 3,000,000 and less than PHP 20,000,000 in gross sales.
- Medium Taxpayer: Between PHP 20,000,000 and less than PHP 1,000,000,000 in gross sales.
- Large Taxpayer: PHP 1,000,000,000 and above in gross sales.
Read all about it here: BIR Taxpayer Classification Under the New Revenue Regulation No. 8-2024
How about Online Tax Payments?
As this is the State of Online Taxation report, we want to show you how we have seen online tax payments have grown on Taxumo. We’ve observed that Income Taxes filed in Taxumo have exponentially grown since 2020, at 58.45% year on year.
Now let’s take a look at the incomes declared by online taxpayers and determine their socioeconomic class based on these declared incomes.
The benchmark of socioeconomic classes has significantly increased compared to the previous year. Here’s the updated version of our socioeconomic classification.
As we reflect on online taxpayers’ socioeconomic data from 2023 and 2024, we see a story of both progress and persistent challenges, painting a complex picture of the nation’s socioeconomic landscape.
This shows the changes in socio-economic categories between 2023 and 2024, indicating shifts in the economic conditions of different segments of the population.
Here’s a detailed analysis and explanation of the data:
- 35% of individuals in the Poor category have moved down coming from Low Income, while 65% remained poor.
- 41% of individuals in the Low Income category had downgraded their socioeconomic status from a higher earning bracket. Meanwhile, 40% have seen an improvement in their socioeconomic status coming from Poor Income. 19% didn’t change their status as Low Income earners.
- 19% of individuals in the Lower Middle category have decreased in their income status, while 38% increased their socioeconomic status. 43% remained in the Lower Middle category.
- 47% of individuals in the Mid Middle category have improved their socioeconomic status, 20% have experienced a decline in their status, and 33% experienced no change in their Mid Middle Income status.
- 8% of individuals in the Upper Middle category have experienced a decline in their economic status, while 53% have improved. 39% had no change in their Upper Middle economic status.
- 55% of individuals in the Upper category have improved their socioeconomic status, 6% have experienced a decline, and 39% remain unchanged. This highlights considerable economic progress within this group.
- None of the individuals in the Rich category have experienced a decline in their economic status, but 44% grew richer than the previous year. 56% have remained stable.
While we observed some upward mobility in people’s socioeconomic status, a significant portion of the Poor and Low categories remain unchanged, indicating persistent challenges in these groups.
There is a clear upward shift in the Mid Middle, Upper Middle, and High categories, suggesting that these segments are benefiting more from economic improvements. The modest upward shift in economic conditions reflects that some segments of society are experiencing economic gains, albeit slowly.
Working for Wages, Across Ages
At the start of the report, we talked about the generational experiences of Filipino taxpayers, specifically Millennials and Gen Zs. In this section, we will take a closer look into the generational experiences of online taxpayers.
Age groups or generations stated in this report are based on the Pew Research Centre definition.
Millennials continue to dominate the demographic landscape, although their proportion has slightly decreased from 72.40% in 2023 to 71.80% in 2024. Meanwhile, Gen Z is steadily rising, growing from 15.20% to 17.18%.
These shifts have interesting implications on work attitudes and experiences, as Millennials and Gen Z are the primary drivers of the Philippine labor force. As more Gen Z individuals enter the labor market, they bring fresh skills and perspectives that can influence economic trends and workforce dynamics.
The slight upward shift in economic categories, such as decreases in the “Poor” and “Low” categories and increases in “Upper” and “Upper Middle,” could be partially attributed to the increasing participation of these younger, more educated generations.
In terms of Income filed per Generation
Millennials continue to be the primary contributors to income filing, maintaining their lead at around 73.50% in 2024, slightly down from 73.90% in 2023, highlighting their pivotal role in driving the country’s economic activity and tax revenue.
Gen Z’s share of income filing has notably risen from 9% in 2023 to 12.70% in 2024, underscoring their increasing labor participation.
Meanwhile, the Silent Generation and Boomers each contribute less than 1% to income filing, reflective of their retirement status and reduced involvement in active employment.
Gen X experienced a decline from 15.80% in 2023 to 12.90% in 2024, signaling a potential shift as some individuals in this cohort approach retirement or transition out of their peak earning years.
Millennials continue to be the primary contributors to income filing, maintaining their lead at around 73.50% in 2024. Meanwhile, Gen Z’s share of income filing has notably risen from 9% in 2023 to 12.70% in 2024.
Compared to last year’s numbers, there have been changes in income sources for some generations:
For Gen Z, there have been increases in the following:
- Gen Z Mixed Income Earners grew by 12%
- Gen Z Businesses grew by 15%
- Gen Z Professionals grew by 10%
Meanwhile, for Millennials, there have been an increase and a significant decrease in the following:
- Millennial Mixed Income Earners decreased by 7%
- Millennial businesses decreased by 4%
- Millennial professional grew by 5%
Boomer Businesses, Professionals, Mixed Income Earners, and Silent Generation Businesses remained less than 1% of its contribution.
Taxpayer Contributions and Cities
We’ll break down the number of Taxumo users per island group and see within each region. To date, Taxumo has over 100,000 users: 20,000 more users than the previous year.
Top 5 cities with Taxumo Users
Luzon
Visayas
Mindanao
Taxes by Industry
21% of online tax filings in the Philippines come from service-oriented businesses. This category includes a wide range of professionals offering services, such as consultants, tutors, and creative freelancers.
Among these filings, the IT & Tech sector, covering areas like software development and computer-related services, makes up 15% of Taxumo’s customer base. This shows a significant increase in professionals from technology fields, like software developers and IT specialists, who are choosing to start their own businesses rather than working for larger companies.
Additionally, professionals licensed by the Professional Regulation Commission (PRC), such as doctors, lawyers, and real estate brokers, account for 6% of the total filings. While as Accountants and Bookkeepers account of 1% in the total contribution. These individuals provide specialized services that require professional accreditation.
Moreover, the report reveals that Online Sellers, who operate businesses through e-commerce platforms, now constitute 3% of Taxumo’s customers. Virtual Assistants, who provide administrative support remotely, and Freelance professionals, offering a variety of services from writing to graphic design, contribute 7% and 6.3%, respectively.
Overall, the data illustrates a diverse landscape of entrepreneurial endeavors in the digital economy, with professionals from various sectors leveraging online platforms to establish their business and manage their taxes effectively.
With 21% of online tax payments coming from service providers, they continue to be the leading online taxpayer group – followed by the IT & Tech sector, who make up 15%.
Taxpayers by Gender & Generation
When you sign up for a Taxumo account, you will be asked to state the gender you identify as.
The choices are:
- Male
- Female
- Non-Binary
- N/A (for non-individual entities)
Your gender identity is not your gender assigned at birth (or biological sex).
Gender identity is an individual’s sense of maleness, femaleness, in between, both, or neither. Only you can fully determine your gender identity. We have a diverse community, and each individual has a different set of needs and challenges.
Seeing detailed information like gender identities allows us and other people to design inclusive solutions tailor-fit to one’s problems and situations.
This data shows how much each gender group has grown each year.
Per segment, here’s the annual growth rate from 2020-2024 :
- Female segment filing is growing by 131%
- Male segment filing is growing by 115%
- Non-Binary segment filing is growing by 85%
Income tax filing by gender group shows an interesting trend: there has been a slight increase of Male and Female online taxpayers this 2024, as we observe a significant decrease for Non-Binary online taxpayers
The data below is based on the Annual Income Tax filed per Gender this 2024:
Female Millennials account for the highest percentage across all categories at 42.98%, followed by Female Gen Z at 10.61%. This indicates a strong presence of female representation in these younger generations within the socio-economic spectrum.
Non-binary individuals, though a smaller percentage overall, also show representation, particularly among Millennials at 1.64% and Gen Z at 0.18%.
For males, the data shows substantial representation among Millennials at 26.82% and Gen Z at 6.17%, though notably lower compared to their female counterparts.
Our Final Thoughts for 2024’s State of Online Taxation report
This State of Online Taxation report has revealed that Millennials and Gen Zs are playing a big role in driving our economy forward and contributing to taxes. But pressing issues remain, especially on the stability of people’s incomes.
For many Filipinos, wages are too low to keep up with the rising costs of living. Our government must make wise policy changes to help Filipino businesses grow and create more jobs.
Ensuring fair wages and offering more income-generating opportunities are crucial. Training programs must not only be accessible, but also keep up with the current market demands, so that more people can learn the skills that businesses need.
Investing more in technology can help boost business growth, and supporting small businesses can enhance job creation and positively contribute to our country’s economic performance.
Solving these problems require the cooperation of both the private and public sector—government leaders, businesses, and professionals. Focusing on fair opportunities means addressing barriers that prohibit businesses and professionals from participating – whether because of their gender identity, sexual orientation, generation, or geographic location.
About Taxumo
Taxumo is the country’s pioneer tax compliance platform accredited by the Bureau of Internal Revenue (BIR). Since 2016, users signed on our platform have remitted about PHP 1.6 billion pesos to the BIR. We continue to serve the Philippine tax paying community through our seamless platform, customer-first support, and resources to make tax compliance a breeze.