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SOME
insurers have fraudulently benefited from insurance
contracts they sell to the public, and for years have
denied the government hundreds of millions of pesos in
premium tax, as actual collection differs from potential
by as wide as P869 million a year.
Some
P8-billion worth of insurance premiums have not been
paid from 2002 up to last year, the Bureau of Internal
Revenue (BIR) and the Insurance Commission (IC) reported
to the Department of Finance (DOF) on Friday.
The
difference, the DOF said, may have lined the pockets of
insurers in the form of additional capital, given
regulatory directives linking the size of insurers’
pockets to the risks they take.
This was
the conclusion drawn from the sharp decline in premium
tax by 67 percent in 2006, from the already sharp drop
of 60 percent the year before.
In
absolute amounts, Finance Undersecretary Gil Beltran
said, the potential was for premium tax collection to
hit P2.487 billion last year, but that only P1.87
billion, or 75 percent, of the potential was actually
attained.
The
discovery comes at a time when both the BIR and the IC
vowed to support bills reducing the whole package of
taxes now imposed on the industry, allegedly making it
one of the most heavily taxed in the country.
The
fraud benefited the “bad” players, as this enabled them
to offer contracts substantially more attractive than
those sold by insurers who followed the rules, IC chief
Evangeline Escobillo told the DOF.
“Clients
migrated from the good players to the bad eggs of the
industry due to the cost advantage enjoyed by those who
cheated on their tax dues,” Beltran said of the IC
chief’s lament.
But if
the insurance premium tax was hopelessly corrupted, the
collection of the documentary stamp tax (DST) on those
contracts should prove an even bigger fraud because the
revenue losses were much higher there, Beltran said.
Escobillo did not provide the relevant data and quoted
only estimates done by the Insurance Commission.
The
amount of DST paid depends on the amount of premium sold
and therefore should be larger.
Insurance premium tax collection in the first three
months this year fell a shade below 60 percent, or by
P200 million, in a period when two of the largest
players reported premium collection increases of 17
percent up to 20 percent, data show.
In the
same period, insurance value added also went up by 37.6
percent.
To stop
all the shenanigans going on, the chiefs of the BIR and
the IC vowed to give each other access to their
respective databases and committed to collect 100
percent of potential this year, Beltran said. |
