Editorial - Illicit fund outflow

The period covered is in the previous administration, but the problem mentioned is certainly not yet eradicated, even under the watch of the daang matuwid team. Shortly before the 27th anniversary of the people power revolution, which toppled an oppressive and corrupt dictatorship, an international anti-corruption watchdog announced that the Philippines was the sixth largest source of illicit financial outflows in the world, based on estimates from 2001 to 2010.

In that decade, according to the Global Financial Integrity, an estimated $138 billion in illicit money left the Philippines. The funds came from various forms of tax avoidance, smuggling, corruption and other illegal activities, but excluding crimes such as drug trafficking and human smuggling, according to the watchdog.

The Global Financial Integrity noted that the problem is greatest in developing countries, with the amounts involved placed at a staggering $5.86 trillion from 2001 to 2010. In 2010 alone, the group estimates that developing countries lost $859 billion – an increase of 11 percent from the previous year’s $776 billion. Trade mispricing, which includes smuggling, accounted for the largest component of the problem.

The Aquino administration has given priority to the campaign against corruption, and progress has been reported in the drive against tax evaders and smugglers. But all these problems are deeply entrenched and can be significantly reduced if not eradicated only with intensified and sustained effort. In the case of trade mispricing and tax avoidance, those at the forefront of the battle need to keep a step ahead of the ever-evolving and innovative ways by which violators and their coddlers in corrupt agencies manage to evade the law.

While the country’s sixth place in the global list covered another administration, the challenge for the current one is to take the country out of the top 10 worst. Improvements registered by 2016 must be sustainable through the next administration.