Purisima says gov't aims to rake billions from tax cheats

Agence France-Presse

Posted at Aug 18 2010 05:47 PM | Updated as of Aug 19 2010 01:47 AM

MANILA, Philippines - The government said on Wednesday it was hoping a name-and-shame crackdown on tax cheats would "scare" them into paying an extra $3.1 billion a year.

Part of new President Benigno Aquino's anti-corruption program, the campaign has led to high-profile figures being investigated for tax evasion.

"We estimate at least P250 billion ($5.54 billion) a year is lost because of tax evasion," Finance Secretary Cesar Purisima told an economic forum attended by businessmen.

Much of that could be because of suspiciously low taxes being paid by 1.4 million self-employed individuals, he said.

"Imagine if we can scare them enough to increase tax payment by P100,000 each. That's P140 billion ($3.10 billion)," Purisima said.

If achieved, the campaign would go a long way to solving the government's budget deficit problems.

The government has said it is facing a deficit of about P293 billion this year.

The Bureau of Internal Revenue has already asked the justice ministry to file tax evasion charges against several high-profile businessmen, including a pawnbroker with a fetish for luxury cars.

Purisima said the bulk of last year's personal income taxes, or 82% of the total, came from fixed-income earners, part of whose salaries are automatically withheld and conveyed to the government by their employers.

Just 5 million Filipinos out of a labor force of more than 38 million pay taxes, according to the revenue agency's estimates.

Purisima said he was under no illusion about the difficulties the campaign faced against tax dodgers, many of whom can hire armies of accountants and lawyers to get them to legally avoid paying more.

"There will be ups and downs. The key for us is to sustain our efforts to create tipping points and make believers out of sceptics so that they realise that it will no longer be business as usual," he said.