160 cases filed, not one tax evader in jail but BIR drive is working

(First of two parts)

One of the very first directives that President Benigno Aquino III issued to revenue-generating agencies when he assumed office in 2010 was for them to stamp out tax evasion and smuggling.

The President’s orders were specific: for the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) to file cases every week against individuals or companies suspected of having deprived the government of much-needed revenue for its social programs.

His message was clear: It’s no longer business as usual under his watch.

The orders were followed to the letter. Cases have been filed every week, with the BIR and the BOC taking turns bringing complaints before the Department of Justice (DOJ).

Three years on, however, many cases are languishing in various stages of the legal process. To this day, not a single tax evader or smuggler has been put behind bars.

Supremely confident

Yet Internal Revenue Commissioner Kim Jacinto-Henares is not just unfazed, she is supremely confident she can put at least one tax dodger in prison before she bows out in three years.

“No one has been put in jail—except for one conviction where the person involved is now a fugitive—but the program is working,” she said in an interview.

That program is the BIR’s Run After Tax Evaders (RATE) campaign which was conceived and used with mixed results in the previous Arroyo administration, but has now received a fresh boost in the Aquino administration.

In the country’s history, only one person—businesswoman Gloria Kintanar, accused of evading payment of P6.3 million in tax liabilities on her Forever Living products distributorship—has ever been convicted by the courts and given a jail sentence. However, Kintanar remains at large since her 2012 conviction, Henares said.

160 cases filed

BIR records showed that, to date, tax authorities have filed a total of 160 cases against individuals or companies suspected of having welshed on their tax obligations. The respondents include large multinational corporations, professionals like doctors and athletes, government officials, and even television and movie celebrities.

Of these cases, 138—all but 22—remain with the log-jammed DOJ in various stages of prosecution (80 have been “submitted for resolution”).

Twenty cases are pending before various courts. Of this number, 18 are with the Court of Tax Appeals or regular courts, one at the Court of Appeals, and one at the Supreme Court—the P5.5-billion tax evasion complaint against businessman Macario Gaw.

Two cases have been dismissed by the DOJ. In one, the subject of the complaint was found to have been deceased, and the other was determined to be a case of mistaken identity.

P42 billion in unpaid taxes

All told, the BIR estimates that these suspected tax dodgers cheated the government of as much as P42.1 billion in unpaid taxes—money that would otherwise have been used to fund government social programs, provide better health services to the underprivileged, build public school classrooms or repair deteriorating roads and bridges.

For Henares, the administration’s failure to secure a conviction is not indicative of weak cases, but rather of a legal system that goes to great lengths to protect the rights of individuals—even if they are suspected to have injured the state through acts like tax evasion.

Henares believes that every single complaint that the BIR has brought to the DOJ for prosecution is “airtight.”

“Otherwise, if it’s not airtight, it’s harassment,” she said.

“But we have to convince them,” she said.

Going after small fry

It does not bother her that the BIR has been going after suspected tax evaders with ever smaller liabilities, compared to when the RATE campaign began.

“When we file a case, it’s not the amount that drives it,” she said.

“We ask ourselves: Is our evidence complete? Are we ready to file? That’s it,” she said.

She said the BIR has even filed complaints against small businesses for failing to issue receipts.

“There’s no amount involved there. We’re trying to make a statement. Nonissuance of receipts is a criminal act,” she said.

True enough, the data show that at no other time in the country’s history has the BIR been performing as well as it has under the Aquino administration.

From the peso value of revenues collected to the steadily declining gap between collection targets and actual figures, the signs are unmistakable.

“The campaign is working,” Henares said. “I think it will work better if we’re able to put someone in jail, but believe me, it’s working.”

(Part 2: Deeply unpopular BIR has beaten collection records)