$400-B illicit money flowed through Phl

MANILA, Philippines – An anti-graft watchdog yesterday said the Philippine government was cheated of $3.85 billion in tax revenues in 2011, part of massive illicit money flows that totaled more than $400 billion in the past five decades.

Global Financial Integrity said in a report that illicit financial outflows – including proceeds from crime, corruption and tax evasion – totaled $132.9 billion in a 52-year period from 1960.

Another $277.6 billion illegally entered the country, predominantly through false invoicing of imports to evade tariffs.

GFI said the government has lost at least $23 billion in revenue from customs evasion since 1990 and lost an average of $1.46 billion in tax revenue each year since 2000.

The report estimated that the underground economy was equal to nearly 30 percent of gross domestic product in 2011.

Malacañang pointed out the GFI report covered a long period of time, even before President Aquino assumed office in 2010.

“We will take note that that is a long-term study covering 51 years. The current administration accounts for only three or one-seventeenth of the 51 years. This is an administration that from day one has committed itself to the proposition that good governance equals good economics and has made the campaign against corruption the cornerstone of its good governance program,” Presidential Communications Operations Office Secretary Herminio Coloma Jr. said.

“So we appreciate studies like this that shed light on the nature, extent and scope of corruption in the hope that this will give us valuable insights that will aid government in further strengthening institutional reforms and ensure that corruption will be minimized, if not totally eradicated,” he said.

Coloma said it was a long-term report and they assumed office without any illusion that this was a small time problem.

“We realized that this is a systemic and deeply rooted problem, that is why we are prepared to address it strategically and to adopt long-term solutions,” he said.

Coloma said increasing revenues was also a priority of the government, aside from judicious use of resources.

“You will take note that, in terms of the overall macroeconomic parameters, government has been very serious in maintaining a low budget deficit to GDP ratio. It is only possible if we are able to continually increase revenue collections and align our spending limits with the government’s capability to collect revenues,” Coloma said.

He said it was under the Aquino administration that the first trillion-peso revenue collection was recorded by the Bureau of Internal Revenue (BIR).

Coloma said these efforts were going hand-in-hand with efforts to increase spending for government reforms and for the inclusive growth program for the economy.

“We are also seriously concerned about raising revenues and this has been the main thrust of the government’s economic cluster,” he said.

Coloma said their efforts to cleanse both the BIR and the Bureau of Customs had spared no one, noting that even government officials and employees were among those who were charged before the courts.

BIR commissioner Kim Henares said the government is bent on plugging the loopholes in customs policies and procedures.

To address the wide-scale smuggling in the country, she said the Aquino administration implemented a top-to-bottom reorganization of the Bureau of Customs (BOC) last year and has started initiating the necessary legislative measures to update the country’s customs rules and procedures.

Among the BOC’s initiatives are updating the value preference guide for all imports to be posted on its website and lobbying for a bill that will allow the customs bureau to disregard transaction value for some items.

“Change is happening. We have identified our weaknesses and rest assured, there will be positive changes in the near term,” Henares said.

The watchdog’s chief economist Dev Kar, who co-authored the report with economist Brian LeBlanc, said illicit outflows have grown from an average of two percent of GDP in 1970s and 1980s to five percent of GDP since 2000. – Aurea Calica, Zinnia dela Peña, AP