Taxmen told to run after more ‘big fish’
THE BUREAUs of the Internal Revenue (BIR) and of Customs (BoC) have received marching orders to nab and build cases against more big-time tax cheats that could each add P20-30 billion to state coffers as part of government efforts to boost revenue collection, the Department of Finance (DoF) said in a press statement yesterday.
Finance Secretary Carlos G. Dominguez III ordered the BIR and the BoC to catch more “big fish” during the department’s executive committee meeting on Friday last week, citing the successful campaign to make an example of cigarette maker Mighty Corp. which had been caught in February and March allegedly using fake cigarette tax stamps in a bid to evade paying correct levies.
“You better line up another big one,” the statement quoted Mr. Dominguez as telling BIR Commissioner Caesar R. Dulay and BoC Commissioner Nicanor E. Faeldon in Friday’s meeting.
“Next year, if possible, catch somebody, another big fish,” he added, saying later: “…[W]e are out for big amounts… our time is limited, so let’s go for the big ones.”
The Finance chief said P20-30 billion would be “a good target” for taxmen in this campaign, following the government’s decision last week to accept Mighty’s offer of P25 billion to settle its excise and income tax deficiencies, along with the voluntary halt to its cigarette operations.
The DoF estimates the total take from the settlement deal with Mighty to reach some P30 billion, inclusive of value-added tax (VAT) from the sale of its assets to Japan Tobacco International (JTI), which paid the first tranche of P3.44 billion on July 20. JTI will pay the P21.5-billion balance upon closing the deal, which has yet to be cleared by the Philippine Competition Commission.
“As a result of BIR’s decisive action against Mighty, we now expect revenues from ‘sin’ taxes to increase by at least P1 billion a month,” Mr. Dominguez said in his speech during ceremonies yesterday marking the BIR’s 113th anniversary.
In his second state of the nation address (SONA) last July 24, President Rodrigo R. Duterte said Mighty’s settlement of its tax liabilities “will be the biggest… on record” that will “produce a windfall for the government…” and should serve as a “lesson to others.” Mr. Duterte had added in his SONA that the settlement “does not preclude other criminal charges” against Mighty.
The campaign to make an example of big tax evaders in order to encourage wider compliance with tax laws is another pillar of the current administration’s efforts to increase revenues substantially. Compromise settlements form part of the BIR’s priority programs to collect some P1.829 trillion this year.
“The key to fiscal stability is revenue generation,” Mr. Dominguez had told lawmakers in the House of Representatives in a briefing last Tuesday.
Last semester saw BIR collections increase by eight percent annually to P848 billion but miss an P881.7-billion target by four percent, while BoC’s take fell three percent short of a P217.7-billion goal even as it increased by 10% year-on-year to P210.3 billion.
The government’s first pillar is its tax reform program that consists of up to five packages, the first of which hurdled the House of Representatives at the end of May, about four months after the bill was filed in that chamber.
That package — which consists of a cut in personal income tax rates whose foregone revenues will be offset by increases in auto and fuel excise taxes, a P10-per-liter excise tax on sugar-sweetened drinks, as well as removal of VAT exemption of some sectors — is now undergoing deliberations in the Senate.
The tax reform program is designed to rebalance the tax burden towards those who can afford it, as well as raise more revenues to support an P8.4-trillion infrastructure drive up to 2022.
The government targets its infrastructure spending to rise to an equivalent of 7.1% of gross domestic product (GDP) by 2022 from 5.4% currently.
That way, it hopes to prod GDP to grow by 7-8% annually until 2022 from a 6.2% average in 2010-2015 and slash poverty incidence to 13-15% by then from 21.6% in 2015, among others. — Elijah Joseph C. Tubayan
