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THE
national government is losing a total of P6.5 billion in
taxes due to 87 tax-evasion cases now in various stages
of prosecution at the Department of Justice (DOJ) and
the Court of Tax Appeals (CTA), according to the finance
department.
In his
keynote speech at the Asian Development Bank (ADB)
Workshop on the Process Map on the Prosecution of
Tax-Evasion Cases, Finance Secretary Margarito Teves
said the 87 cases resulted from the Bureau of Internal
Revenue’s (BIR) Run After Tax Evaders (RATE) program
which targets filing a total of 116 cases by year-end.
Secretary Teves said forgone revenue from these 87 cases
alone amounted to P6.5 billion, which is almost the size
of the finance department’s budget of P6.482 billion and
the justice department’s budget of P5.396 billion.
He said
the amount even comes close to the entire judiciary’s
2007 budget appropriation of P9.355 billion and exceeds
the P197.553-million budget of the CTA.
Teves
added the P6.5 billion involved in these cases is just a
fraction of the estimated P243 billion in potential tax
revenue lost to tax evasion annually. This amount is
equal to approximately one-third of the BIR’s 2007
revenue target or P0.33 of lost tax revenue for every P1
collected by the BIR.
“Given
the magnitude and the extent of this tax evasion, the
BIR must necessarily pursue an aggressive criminal
enforcement strategy to complement and reinforce its
civil-collection and assessment activities, with the end
in view of closing the revenue gap that is attributable
to tax evasion,” Teves said in his speech.
“Admittedly, the actual revenue benefit of prosecuting a
tax-evasion case is realized only in the long term, that
is, when the offender is finally convicted by a court
and, together with the
penalty of imprisonment, is made to pay the deficiency
tax. This raises the obvious question of why the
government would in some cases forgo an immediate
opportunity for collection and choose to wait a
relatively longer period of time in prosecuting a
criminal case before finally collecting the tax,” Teves
explained.
He said
the two reasons for this are criminal enforcement of tax
laws and good governance. Teves said the enforcement of
tax laws is an integral part of the tax administration’s
collection strategy while good governance assures the
taxpaying public that the tax system is fair and
equitable.
Teves
explained that criminal prosecution of tax evasion
enhances voluntary compliance and deters violations of
the Tax Code by increasing the risks associated with tax
evasion.
“The
indirect revenue benefit of the RATE program is
demonstrated by the fact that on April 15, 2005—or just
a month after the BIR launched the RATE program—the BIR
registered a record single-day income-tax collection of
P21.4 billion, or a 43.6-percent increase over
collections made on the same day of the previous year,
when the RATE program did not yet exist,” he said.
Meanwhile, Teves said good governance is reflected in
the manner in which tax-evasion cases are prosecuted and
remains to be a concern not only for the BIR but also
for the national government.
Besides
the fact that the BIR collects almost 70 percent of the
government’s total revenue, Teves said it is essential
to show the public that criminal violations of any law
are detected, investigated appropriately, and swiftly
penalized.
“It is
for this reason that President Arroyo has directed the
BIR to be more proactive in relating with the CTA and
DOJ to facilitate and expedite the conversion of the
pending cases into convictions,” Teves added.
The
workshop aims to provide a forum for focused discussion
with government stakeholders on key issues in the
prosecution of tax-evasion cases. The key issues were
identified under a draft process map prepared by ADB
consultants.
The
draft clarified the procedures and processes for
prosecuting these cases, highlights perceived
impediments to the detection, investigation and
prosecution of these cases, and recommends reform
initiatives to address these impediments. |
