Gov’t to go after tax evaders, smugglers
The Philippine Star 02/02/2006
http://www.philstar.com/philstar/News200602020401.htm
After raising the expanded value-added tax (EVAT), the government will now go after tax evaders and suspected smugglers as it strives to narrow its budget deficit, Finance Secretary Margarito Teves said yesterday.
President Arroyo raised the EVAT to 12 percent from 10 percent yesterday to raise more revenues for the cash-strapped government and revitalize the economy.
Administration officials appealed to critics and the opposition for sobriety, giving assurances that the tax hike’s impact on prices would be minimal.
Teves said Mrs. Arroyo is cracking down on tax evaders to show she is serious about bringing down the budget deficit.
"We’re trying to move these cases," Teves said in an interview yesterday. "The important aspect is to bring these cases to court. We’ll have to work harder with the Department of Justice."
The government estimates that as much as a quarter of tax collections, or about P120 billion, is lost annually because of tax evasion.
"This is what people are waiting to see now: Can the government follow the tax reform with the implementation and making sure that the right amount of taxes is collected?" asked David Cohen, director of Asian forecasting for Action Economics in Singapore.
Mrs. Arroyo aims to reduce the budget deficit for a fourth year in a row in 2006 to P125 billion, 40 percent less than the record P211 billion posted in 2002. The deficit fell 22 percent to P146.5 billion in 2005.
Yesterday’s EVAT increase follows expansion of its coverage to include sales of oil, power and other previously exempt products and services on Nov. 1. The tax changes are expected to bring in an extra P75 billion revenue this year, Teves said.
Since the program to go after tax evaders started in March, the Bureau of Internal Revenue (BIR) has recommended the filing of tax evasion cases against 44 companies and persons, said bureau assistant commissioner Celia King.
A former Arroyo Cabinet official, movie stars, basketball players and other celebrities were among those that have been slapped with tax evasion charges.
BIR Commissioner Jose Mario Buñag said the government is even asking boxing champ Manny Pacquiao to use his popularity to convince Filipinos to pay taxes.
The government will resume the weekly filing of tax cases next week, King said. The last time a case was filed was in the first week of December, she said.
"We will be launching an aggressive campaign against tax evasion this month and this time it will be nationwide," she said.
Aside from filing cases in court, the government also offered in March a cash reward of up to P1 million to those who will notify the government about suspected tax dodgers. Tax collections make up 70 percent of government revenues.
Mrs. Arroyo also signed a law last year that will give the BIR chief the authority to remove or transfer tax collectors who failed to meet their revenue target.
"The government needs to increase revenue so it can allocate more funds into infrastructure projects," said Xuelin Liu, an economist at the Asian Development Bank. "The country is dependent on agriculture and yet it lacks farm-to-market roads and other infrastructure to help the farmers."
Budget Undersecretary Laura Pascua yesterday said the government will spend 30 percent, or P22.5 billion, of the expected additional EVAT revenue to build roads and other public infrastructure projects. The other 70 percent will be used to narrow the budget deficit, which it hopes to wipe out by 2008.
Farm output accounts for less than a fifth of the nation’s gross domestic product and employs 37 percent of its workforce, according to government statistics.
The government will prioritize "infrastructure related to agriculture because agriculture needs a lot of services: irrigation facilities, canals, farm-to-market roads and water supply."
Cool it
Trade Secretary Peter Favila said yesterday’s tax hike implementation went smoothly and only a few businesses were caught profiteering.
Profiteers face arrest and imprisonment if found guilty, he warned.
Interior Secretary Angelo Reyes has ordered local price coordinating councils to keep a close eye on prices.
Executive Secretary Eduardo Ermita and other officials said they expect Arroyo critics to use the issue against the administration, which has been reeling from vote-rigging allegations against Mrs. Arroyo since June.
"Let’s just say that that (VAT) is an issue that they can ride on," Ermita said in a press conference in Malacañang. "Even before the date of implementation, they have been espousing that as one of the issues and one of the concerns of the administration is that it would worsen the lives of the people."
He said protests would be allowed as long as they don’t overstep the bounds of law.
Favila also appealed for sobriety, saying "such important issues are not resolved through rallies."
"Let us not alarm the Filipino people. We have known that this was coming and we have all been made aware why we need to proceed with the law’s implementation," he said.
Short- and long-term measures are in place to minimize the impact of the expanded tax, he said, adding that the National Price Coordinating Council has been closely monitoring profiteers since the EVAT was implemented late last year.
Teves said Mrs. Arroyo also ordered the release of P500 million to the National Irrigation Administration to repair irrigation systems and improve farm output. Prices would remain stable if there is a steady supply of rice and other farm produce.
The government is finalizing details to exempt minimum-wage earners from paying income tax and is concentrating funding to provide better health care and education for the poor, Teves added.
The Department of Energy is in talks with cooking gas manufacturers to make liquefied petroleum gas tanks more affordable, Energy Secretary Raphael Lotilla said.
Left-leaning groups yesterday also pressed their demand for Congress to legislate a P125 across-the-board wage increase.
The Federation of Philippine Industries suggested yesterday an intensified campaign to inform the public on how the EVAT works and how prices would be affected.
"Sometimes the government is lacking in information," said FPI president Jesus Arranza.
"You should be frank to the people and say that there is a shortage of funds and we need to raise the VAT, otherwise we would be forced to borrow money again. But the government should also honestly tell the people that they would perform their duty and make up for their shortcomings in the past. They should also promise to reduce the VAT once they have met the target."
Get serious
The Makati Business Club (MBC) said the administration should intensify its crackdown on tax evasion and smuggling to show it is serious in wiping out the budget deficit.
MBC executive director Guillermo Luz said the EVAT hike is a "positive step insofar as raising revenues to cut the government’s budget deficit is concerned."
But increasing taxes alone cannot solve the deficit if tax evasion and smuggling continue to run rampant.
"The problem is, it’s an additional tax burden for those already paying taxes, which is unfair," Luz said. "Tax laws should be implemented fairly. Tax evaders and smugglers have been getting away for so long and will still get away."
Taxes, he said, are "supposed to be burdens that need to be carried by everybody. But the non-payers still go scot-free."
The Bureau of Customs said yesterday it is set to introduce several measures to curb smuggling, including using x-ray machines to inspect cargoes and closer coordination with foreign trading partners so the bureau will know exactly what’s being brought into the country.
The EVAT tax is considered the centerpiece of Mrs. Arroyo’s fiscal reforms that are intended to forestall a looming Argentina-style fiscal crisis.
But critics charge the expanded VAT will result in higher inflation because electricity and petroleum are no longer tax-exempt. — Paolo Romero, Aurea Calica, Cecille Suerte Felipe, Mayen Jaymalin, Evelyn Macairan, Edu Punay
:mrgreen:
Gov’t to go after tax evaders, smugglers
murag every 3 months or so, naa'y announcement na government will go after tax evaders and smugglers....
Originally Posted by FK
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