Everything you've wanted to know about RP politics, but were afraid to ask.

Lifestyle check on tax evaders, it’s about time

Posted by akosistella on March 17, 2010

By Dan Mariano

With a population of about 90 million, there are just three million registered income taxpayers in the Philippines.

It should be easy to see why our country is a perennial laggard in a part of world that has undergone spectacular development in the last three decades or so. After all, the tax base is a key factor for determining a nation’s capacity for growth.

When the citizens of a country do not pay the right taxes, the government cannot build and maintain enough roads and other civil works, provide social services, give civil servants sufficient salaries and benefits, etc.

The country’s tax base is thin enough as it is already. What makes matters worse, according to an official of the Bureau of Internal Revenue (BIR), is the high incidence of tax evasion.

Worst of all, tax evasion is committed precisely by those sectors who have the resources to contribute their fair share to the nation’s coffers, but refuse to do so. It’s like the Biblical injunction in reverse: from whom much has been given not enough is going around; all too often, nothing at all.

In its bid to plug the numerous leaks in tax collection, the BIR has renewed its campaign against tax evaders. “This time around,” said Marina de Guzman, chief of staff of BIR Commissioner Joel Tan Torres, “we will undertake a thorough lifestyle check.”

Speaking at the Kapihan sa Sulo media forum on Saturday, de Guzman said BIR teams have been ordered to look into “the lavish spending of taxpayers and compare this with how much income they have officially declared and how much taxes they have actually paid through the years—if any.”

Designated BIR teams are coordinating with various government agencies and private companies, which can supply information on the suspected tax evaders’ real and personal property as well as the level of their purchases and consumption.

“The Land Transportation Office can supply us with information on how many cars are registered under the name of specific taxpayers. The Land Registration Authority and the Register of Deeds can give data on real estate ownership,” explained de Guzman. “The Department of Education and the Commission on Higher Education can also help us find out where the children of suspected tax evaders are enrolled and how much tuition they are able to pay.”

She added: “We are even asking Meralco to help us find out how much electricity taxpayers consume, which should indicate how large their houses are or how many home appliances they own.”

Other information on the disposable—but undeclared—income of taxpayers is being gathered from credit card companies, homeowners associations of exclusive subdivisions, now called “gated communities,” as well as from airlines and shipping companies, resorts and country clubs, etc.

After gathering enough evidence to pin down the deadbeats, the BIR teams were directed to coordinate with the police Criminal Investigation and Detection Group, the Department of Justice and, in the case of crooked civil servants, the Office of Ombudsman to help prepare airtight cases against tax evaders, de Guzman said.

The lifestyle checks, according to de Guzman, have already begun to produce positive results. Since Tan Torres took over as BIR chief late last year, the agency has not only seen its collections increase—it has also exceeded its monthly revenue targets.

For the current year, the BIR’s collection target is P830.4 billion, said de Guzman who added that the agency can meet, if not overshoot, its goal.

De Guzman also said the BIR is keeping close tabs on the expenditures of local and national candidates to ensure the collection of the 5-percent withholding tax on campaign expenses.

The campaign tax, part of the BIR’s “Project Iboto Mo,” is not imposed on contributors, donors or candidates but on suppliers who render services and products like advertisements and other campaign materials.

Tan Torres had been reported saying earlier that the BIR expects to collect at least P1.5 billion from the campaign tax.

In addition, the BIR will insist on collecting campaign taxes even on unsuccessful aspirants and a 20-percent penalty plus interest will be imposed on delinquent taxpayers.

Of course, the success of any tax collection drive hinges on credibility, which in turn depends on popular perception. If the public sees that the BIR is playing favorites or that it is timid to go after the influential and the powerful, its effort to combat tax evasion would come to naught.

Besides, the BIR itself—long perceived as one of the government’s most corrupt agencies—needs to apply its lifestyle check on its own officials and personnel.

De Guzman assured that the cleansing of the taxmen’s ranks is a continuing process and has already resulted in the removal of many undesirable BIR employees.

All this should be good news to fixed-wage earners whose income is taxed at the source through the withholding-tax scheme. For too long, they have seen large chunks of their income—ranging from a quarter to a third of the total—deducted by the BIR even before they could get their hands on their money while businessmen, professionals, celebrities and others belonging to this special category pay at lot less proportionately.

Most fixed-wage earners are probably asking: Why did it take the BIR so long to launch its lifestyle check on suspected tax evaders?

Well, as the saying goes, better late than never.



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