Government to continue war vs corruption, smuggling

MANILA, Philippines - The government said it would continue to address corruption and rampant smuggling in the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) as part of efforts to fix the country’s fragile fiscal position.

Finance Secretary Margarito Teves said that along with efforts to push for fresh tax measures, the government is not forgetting the need to address the perennial problem of corruption and smuggling in the two revenue agencies of government.

“Addressing collection efficiency is our priority but we also need revenue enhancement measures,” Teves said.

The Finance chief said the government would continue to implement its anti-smuggling, anti-tax evasion and anti-corruption programs by filing cases against erring officials.

These programs include the Run After Tax Evaders (RATE) by the BIR, the Ran After Smugglers (RATS) by the BOC and the Revenue Integrity Protection Service (RIPS) of the Department of Finance.

At the same time, Teves blamed the erosion of revenues to various measures approved in Congress. He said if only lawmakers would approve fresh tax measures such as the value-added tax law in 2005, it would signicantly help boost state coffers.

Teves said that in 2005, when Congress approved the Expanded Value Added Tax Law, the government was able to raise P80 billion because of it.

At the same time, the Finance chief lamented that these gains have been eroded by other measures approved in Congress that affect revenues.

He cited for instance the Minimum Wage Law which increased the personal tax exemptions of taxpayers and exempted the withholding tax on minimum wage earners.

Republic Act 9504 or the tax relief law took effect in July 2007 and has been estimated to have been responsible for P20 billion in lost revenues yearly.

The law exempted minimum wage earners from withholding tax and increased the personal exemptions of individual taxpayers.

According to estimates by the Department of Finance, P60 to P65 billion will be lost yearly because of various revenue-eroding measures which include the lowering of the corporate income tax rate to 30 percent from 35 percent which is expected to translate to revenue losses of P15 to P20 billion yearly, and the National Tourism Act, which is estimated to translate to P3 billion in foregone revenues.

Another measure, the imposition of franchise tax on power transmission in lieu of all national and local taxes, is expected to leave a dent on state coffers amounting to P9 billion a year.

The so-called Personal Equity Retirement Account (PERA) Act of 2008, a tax-free pension scheme for retiring individuals, meanwhile, would cost the government P7 billion yearly.