Gov’t lost P430 billion in tax leaks

The government has lost nearly P430 billion in a span of five years from fiscal leaks in corporate and individual income tax administration.

This translates to an average of P85.7 billion a year from 1998 to 2002, the National Tax Research Center (NTRC) said yesterday.

According to the NTRC, individual fixed-income earners have been faithfully paying their taxes, but the same could not be said for corporations or professional and self-employed individuals.

NTRC director Lina Isorena told reporters yesterday that historically, individual fixed-income earners have been paying more taxes than other segments of the taxable population, with an estimated tax leakage of only 8.6 percent every year from 1998 to 2002.

The gap between collectible taxes and actual taxes paid by professional and self-employed individuals, on the other hand, averaged 69 percent during the same period.

According to Isorena, the gap between the taxable income and the actual tax collection from individual fixed-income earners averaged only P4.6 billion a year in 1998-2002 while the gap was P26.7 billion every year for professional and self-employed individuals.

For corporate taxes, Isorena said the NTRC estimated a tax gap of about 62 percent, indicating that the government missed out on an average of P54.4 billion every year from corporations that managed to skirt paying the correct corporate income taxes.

Isorena said the NTRC estimated that the Bureau of Internal Revenue (BIR) collected only an average of about 30 percent of the amount that should have been paid by professionals and self-employed individuals.