Improving the country’s tax revenues

“ Instead of introducing new tax reforms to raise funds for the government’s social services and infrastructure programs, the government should be looking into the issue of smuggling at BoC.

A week ago, Congress approved tax reform laws to support the government’s social services and infrastructure programs.

House Bill 4157, or the Corporate Income Tax and Incentives Rationalization Act (CITIRA), seeks to gradually reduce the corporate income tax (CIT) rate and rationalize incentives for businesses.

The CITIRA bill is the refiled and renamed version of the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill from the 17th Congress. It was originally called TRAIN 2, or the second tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

I believe that the current administration is doing its best to alleviate the lives of Filipinos as well as make it easier to do business in the country by introducing new tax measures.

I tend to agree with Buhay Hayaang Yumabong (Buhay) partylist Rep. Jose “Lito” Atienza that new tax measures approved recently by the House are not needed if, for example, the Bureau of Customs (BoC), which the President specially mentioned during his State of the Nation Address (SoNA) as one of the most corrupt agencies under his administration, collects the right amount of duties and taxes.

Atienza said that instead of introducing new tax reforms to raise funds for the government’s social services and infrastructure programs, the government should be looking into the issue of smuggling at BoC.

The BoC was at the center of media limelight last year when a huge shipment of drugs came under the nose of some officials of the bureau “undetected,” resulting in heads rolling. The President axed 64 BoC officials this year, hoping that corruption will stop in the bureau.

But it seems red tape and bureaucracy still exist within the corridors of BoC.

Atienza in news reports said the Duterte administration should look into the possible leakage as a result of alleged collusion between Customs officials and large construction and steel industry players because the government is losing hundreds of billions of pesos due to unabated smuggling, especially of steel, at the ports. I really hope this is not true.

I was trying to understand where Atienza was coming from and realized that he was referring to the reported investigation being done by the Presidential Anti-Corruption Commission (PACC) that importation documents allegedly submitted by construction, in particular steel manufacturers, bear signs of import “misdeclaration.”

The PACC is probing into the real declared value of the imported billets over the past 10 years because during those times these steelmakers declared lower amounts of duties and taxes. Tax evasion cases against these officials suspected of being involved in smuggling are now reportedly being prepared by the PACC, according to its chair, Dante Jimenez.

Atienza cited that the Customs Modernization and Tariff Act was signed four years ago, but the pre-inspection provision specified in Section 440 — that container vans should be inspected at their ports of origin — remains unimplemented.

I can empathize with Atienza why he seems resigned that BoC is reluctant to adopt the pre-shipment inspection of all cargo vans coming into the country. It seems they are not “keen” in knowing what is inside the container vans and rely on the declaration of importers.

Industry analysts say that a minimum of P200 billion is lost every year due to unabated smuggling.

According to PACC, the total imports by the industry reached 9.1 million tons last year, with imports of over P2.3 trillion brought into the country over the last decade.

Given these numbers, we hope these estimated lost revenues for the national government’s coffer are addressed, then perhaps there is a real urgency to further dig deeper on the collusion between BoC officials and large industry players. It could even dwarf the tax evasion case last year by giant cigarette maker Mighty Corp., which paid nearly P40 billion to the Bureau of Internal Revenue to settle tax deficiencies.

Indeed, the lost tax revenues are enough to support social services programs of the government or even fund infrastructure projects under the President’s “Build, Build, Build” programs, particularly those that are intended to alleviate the country’s transportation system to ease the commuters’ daily burden.