IBON to gov't: Plug holes in tax collection

Instead of blaming tax cheats for its debt burden and loss of revenue, the government should start plugging up the holes in its revenue collection system starting with big corporations. This was the challenge of militant think tank IBON Foundation as it questioned Budget Secretary Rolando Andaya Jr's claim that tax cheats are solely to blame for the situation. "While tax evasion is indeed a factor in reduced revenues, the secretary should turn his attention to big corporations that have the capability to evade paying the correct taxes," it said. "As budget secretary, Andaya should look at the country’s debt portfolio to see which debts are onerous and should no longer be honored, such as the loans contracted for the Bataan Nuclear Power Plant, which cost taxpayers nearly P4 million a day," it added. It said huge corporations, foreign investor incentives, government corruption, and government's liberalization policy have all significantly cut public revenues as well. Citing a study by the National Tax Research Center (NTRC), it said tax evaded by corporations reached P270 billion from 1998 to 2002, or 43% of total tax evaded during the review period. On the other hand, it reminded government that tax evasion is mainly a result of government's failure to run after tax evaders among corporate taxpayers. IBON added trade liberalization, which government is aggressively implementing, has also resulted in overall tariffs falling by 50 percent. "Hence, government's tariff reduction program has resulted in lost revenues of more than P1 trillion from 1995 to 2003," it said. Also, it said generous government incentives to attract foreign investors have resulted government waiving some P462 billion from 1999 to 2003, including P109 billion in 2003 alone. IBON added that government corruption remains a large contributor to lost public revenues, which could otherwise be used to deliver vital public services. It quoted the United Nations Development Program's Common Country Assessment as saying some 13 percent of the 2001 budget, or P100 billion, was lost to corruption. "If this percentage is applied to the 2005 budget, then some P119.4 billion may have been lost to corrupt officials," it said. Worse, IBON said these lost revenues played a big part in government's perennial budget deficits, as it has been forced to continuously borrow just to meet its regular expenses. This has also trapped government in a vicious cycle, as it borrows more and more just to service the interest and principal on its outstanding debt. The debt trap has also resulted in reduced expenditures for vital social services, it said. - GMANews.TV