Plunder raps eyed vs top tax evaders

MANILA, Philippines - Tax evaders with more than P50 million in unpaid taxes may face plunder charges, Finance Secretary Cesar Purisima said over the weekend.                                             

Purisima said this would send a strong signal to the public that the government is serious in going after tax evaders and smugglers. Finding probable cause for plunder means detention for the duration of the trial because it is a non-bailable offense.

In the Philippines, the crime of plunder is defined as theft of public and private funds with a threshold of P50 million.

The Aquino administration has promised not to impose new taxes and instead recover revenues lost to tax evasion and smuggling.

Purisima said that during the review of tax evasion cases, the government fiscal team encountered a case with liabilities as high as P25 billion.

Earlier, he said the fiscal team is prepared to pursue tax evasion cases against officials of the Arroyo administration linked to corruption cases as recommended by the Truth Commission, which was created to investigate the supposed anomalies under the nine-year Arroyo administration.

The administration has been filing cases against tax evaders and smugglers almost every week.

The government plans to keep the budget deficit ceiling at P325 billion this year or 3.9 percent of gross domestic product and at P298 billion or 3.3 percent of GDP in 2011. 

A newly established think thank, however, urged the government to protect the privacy of taxpayers in its intensified campaign to run after tax evaders.

The Forensic Law and Policy Strategies Inc., also known as Forensic Solutions (FS), said that while the program of the administration to flush out tax cheats through lifestyle checks is within the power of the executive department, it should also protect the constitutional right to privacy of Filipino taxpayers.

In its second policy paper obtained by The STAR, the think tank explained that even if the government can pry open the records of third party sources to find out if taxpayers under investigation are paying the correct taxes on their actual incomes, they should be informed of the audit and be given an opportunity to respond to the accusations appropriately.

“Given the broad powers of the Commissioner of Internal Revenue, proper safeguards should be put in place to ensure that the inquiry is made in good faith; measurable standards should be defined to prevent intrusions on the constitutional right to privacy; and opportunity should be afforded the taxpayer to timely invoke judicial or other appropriate remedy to impugn such inquiry, if such standards are not met,” said the group created by former justice secretary and solicitor general Alberto Agra.

Agra co-authored the policy paper titled “Curbing Abuses on BIR Lifestyle Check on Individuals” with lawyer Maricel Baltazar, an expert on taxation and corporate laws as part of their Tax Series.

Agra and Baltazar noted that BIR’s Revenue Memorandum Order 19-2010 also known as the Taxpayer’s Lifestyle Check System is broadly written to the point that there are no guidelines or standards to determine who should undergo lifestyle checks.

They added that the memorandum does not inform the taxpayer under investigation that third party informants have been contacted to determine his tax liability.

Through RMO 19-2010, the BIR can verify the existence of a taxpayer’s high-value assets or conspicuous spending by accessing the records of government and private entities, such as, but not limited to, the Land Transportation Office, Bureau of Immigration, Maritime Industry Authority, Civil and Aeronautics Board, Meralco, Land Registration Authority, Register of Deeds, airline and shipping firms, resorts, membership clubs, homeowners associations, real estate development authorities, and credit card companies. For government officials, their Statements of Assets and Liabilities and Net Worth and Amnesty Returns would be examined.

The BIR has another way of gathering information on taxpayers, through Executive Order No. 98 issued by former president Joseph Estrada, which requires all government agencies, including government-owned and -controlled corporations, and local government units to incorporate the Taxpayer Identification Number or TIN in all forms, permits, licenses and other official documents which they issue in their business transactions.

Just recently, the BIR was able to file a case against a prominent businessman for failing to correctly file his income tax return when tax investigators found out through LTO records that he was able to acquire a luxury car worth P26 million in 2007 despite filing a zero-income tax return for that same year.

FS is a think tank offering services in the fields of policy, law reform, advocacy and governance. - With Edu Punay