‘Large-scale tax evasion is economic sabotage’

THE chairman of the House Committee on Ways and Means on Monday said at least P30 billion is lost in tax revenues due to illicit trade in cigarettes.

With this, House Committee on Ways and Means Chairman Joey Sarte Salceda said they are considering defining large-scale tax evasion as economic sabotage.

“Now that we know the importance of reliable revenue streams during this pandemic, large-scale tax evasion is definitely economic sabotage. The law has to reflect it,” Salceda said in a statement following his committee’s motu proprio hearing.

Salceda also urged the Bureau of Internal Revenue (BIR), the Bureau of Customs (BOC) and the Philippine Economic Zone Authority (PEZA) to crack down on illicit trade on cigarettes.

“I want a crackdown on the illicit cigarette trade. We are losing P30 billion annually due to this, from the laxity of enforcement,” the lawmaker said.

Salceda said it was also found that ecozones are used as avenues for illicit trade due to loose enforcement rules.

Open to audit

FOR her part, Peza Directorgeneral Charito B. Plaza said her agency “cooperates with the BIR and allows them to conduct inspections.” Plaza said ecozones are also open to audit.

Salceda requested Plaza a report on the accomplishments and activities of the PEZA police, particularly enforcement activities against illicit trade in cigarettes.

“It is not enough that PEZA cooperates with BIR. You have an ecozone police. You have the mandate to enforce the law in ecozones,” the lawmaker said.

Salceda said he will study potentially having a ring-fenced regime or “licensed area” for highly-regulated products so that they are not commingled with less-regulated industries in the same ecozones.

“We will definitely come up with legislated solutions after this hearing. Stricter enforcement is absolutely critical, so the policy fix will involve closing the loopholes that lighten enforcement,” the lawmaker added.

Salceda said he is invoking his oversight powers “to have the BOC conduct a program similar to the ‘Run Against Tax Evaders’ of the BIR.”

Unique ID code

SALCEDA asked the BIR to reverse Revenue Regulation 9-2015, which exempted cigarette manufacturers from tax stamps for exports. Instead,

he wants the BIR to require them to have unique identification codes (UIC).

“This [regulation] is the mother law of smuggling,” the lawmaker said.

According to Salceda, given that it relies on self-declaration and regulation, it is highly-prone to abuse especially in a highly-regulated product.

“It’s a regulated product. And a violation of tax and trade rules on cigarettes is a malum in se; it is bad on its own. So, we have to be stricter with the regulatory pressure. We are very strict with crude. Cigarettes are also excised. The push of the thumb should be just as strong,” the solon said.

In response, BIR Commissioner Caesar R. Dulay promised, “on his word of honor,” he will have the policy amended.

“We will do that, absolutely; we will reverse it,” Dulay said.