TAX NEWS - 2010

Department of Finance (DOF) will not hesitate to file cases vs tax evaders

The Department of Finance (DOF) will not hesitate to file charges against tax evaders and errant revenue officials as soon as possible to fulfill the new president's promise to curb corruption, the department's new head said on Wednesday.

Anti-smuggling and anti-tax evasion programs such as the Run after Tax Evaders (RATE) program and Revenue Integrity Protection Service (RIPS) will be implemented "aggressively" to battle corruption in the government and plug loopholes in revenue collection, said Finance Secretary Cesar Purisima.

"Our handicap in the past was the inability of the Justice department to properly process our complaints as well as getting through the judiciary," Purisima said at a press conference in Malacañang after the first Cabinet meeting of President Benigno Aquino III.

The bureaus of Internal Revenue and Customs, the national government's two biggest revenue sources, are both under the DOF.

With a "very capable" Leila de Lima heading the Department of Justice, the public can expect legal suits against corrupt officials and tax evaders to progress, said Purisima.

Purisima was finance secretary in the first half of the Arroyo administration before he and nine other ranking government officials resigned in 2005 over allegations that then President Gloria Macapagal-Arroyo rigged the previous year's elections.

"I think within the next few weeks we'll see our first actions in this area," said Purisima. "When we are able to achieve that environment of increased perceived risk among all the players in this space, then hopefully even the private sector would be more careful in being part of tax evasion or customs smuggling situations."

"We are not targeting a balanced budget which we believe is not necessary at this point, to support programs like the conditional cash transfer," he said.

The new administration's goal is to reduce the deficit to two percent of the gross domestic product over a three-year period.

Purisima said it is "pointless" to impose new taxes if the leaks are not plugged. "What we need to do is expand the tax base so it is more equitable. The goal is if we succeed in improving efficiency we can see a solution 5-6 years down the road," he said.

He added that imposing new taxes is not a priority of the Aquino administration. He said the government will focus mainly on improving tax collection to ensure funding for Aquino's reform proposals.

Socioeconomic Planning Secretary Cayetano Paderanga said he will review the economic figures released by the Arroyo administration and come up with an evaluation next week.

Also at the press conference, De Lima said that one of her priorities in the DOJ is to review the effectiveness of anti-smuggling and anti-tax evasion task forces.

Purisima also asked the public to report abuses by officials of the BIR and the BOC.

"We have to review what we have right now. We're not sure we can file cases next week but certainly the mandate is to send a very clear signal to revenue-collecting agencies as well as the taxpayers that this administration means business in improving the efficiency of collection of revenues," he said.

Aquino himself has instructed Budget Secretary Florencio "Butch" Abad to go for zero-based budgeting for the 2011 budget cycle, Purisima said.

All department heads have been asked to help the Department of Budget and Management (DBM) identify their "top priorities" and outstanding programs to give a clearer idea on how next year's budget should be allocated, Purisima added.

Aquino himself will be "hands on" in the succeeding budgeting process, said the finance chief.

All Cabinet members were also instructed to provide status reports in two weeks regarding how their departments have spent their budget allotments so far.