Shame old story

OK–and so the Supreme Court restrained the Bureau of Internal Revenue (BIR) on one small part of its notorious “name-and-shame” campaign, in particular the rule forcing doctors, lawyers and the like to divulge to the BIR the exact fees that they charge specific clients.

Actually, according to reports, the Supreme Court merely stretched its earlier TRO obtained by a group of lawyers, directed against the new rules of the BIR that require lawyers to disclose to the BIR the exact fee, name and tax identification number (TIN) of clients, plus the date and time of consultation.

The lawyers argued that only the judiciary—i.e. not the BIR—could prescribe rules on the legal profession, thus branding the BIR rules as “unconstitutional.” When a group of doctors joined the case, the court en banc then decided to stretch the TRO to also include the medical profession.

What do you think? Could it mean that other groups would likely follow suit?

For the past few years, anyway, the BIR has been applying the “name-and-shame” tactic to increase its collection, even coming out with media campaigns that seemed to portray doctors as tax-evading crooks and all. The doctors of course responded with their own media blitz, taking note that not all doctors were villains, as the BIR campaign seemed to depict.

According to the BIR, however, the new rules precisely intended to create transparency in the tax system for professionals and self-employed—e.g. doctors and lawyers—thus enabling the BIR to zero in on the notorious tax evaders.

Well and good. But the new rules also would just add to the complication of the tax system, with all those data sorting and bookkeeping that should only give BIR personnel more reason to harass taxpayers to force them… well, to “compromise.”

The new rules would be nowhere near the “simplified system” that taxation experts, both here and abroad, have declared as the only way that the BIR could solve our enormous problem in tax evasion.

For the crooks in the bureau, in other words, the new rules would just be the same old shakedown and collect story.

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In the public health sector of the government, medical practitioners seemed to be expect big results in the “sin tax” collection of the BIR, particularly since somebody just announced that the BIR collected last year more than P90 billion in excise taxs on tobacco and alcohol products.

Here is the shocking news: For much of 2013, the first year of the “sin tax” law, when the BIR supposedly overshot its collection target, the DOH nevertheless did not get any significant release from the treasury from out of the supposed P90-billion collection.

To think, boss, the very same “sin tax” law set aside 80 percent of the collection from tobacco products for “public health,” broken down into 63 percentage points for the universal health care program (a.k.a. National Health Insurance Program) and 17 percentage points for medical facilities—you know, to benefit all those ill-equipped barangay clinics and those pathetic government hospitals.

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While the BIR claimed “success” in its collection of excise tax on cigarettes and alcoholic beverage, it seemed that the BIR overlooked one important directive from Finance Secretary Cesar Purisima regarding a cigarette company.

That was none other than Mighty Corp. based in Bulacan, owned by the Wongchungking family, which the DOF last year estimated to have cheated the Aquino (Part II) administration of some P4.4 billion in payments to the BIR and the Bureau of Customs—and only during the first half of 2013, at that.

About two months ago, anyway, Finance Undersecretary Jeremias Paul revealed in a hearing in the House of Representatives that the BOC already collected some P850 million in additional revenues from Mighty, after the “special audit” done by the bureau on the cigarette maker.

And then, in a report to the Senate tax research unit, Customs Commissioner John Sevilla called the bonded warehouse operations of Mighty as “highly irregular” due to unusually importation of raw materials supposedly for re-export as cigarettes.

Thus the BOC suspended the bonded warehouse operations of the company, revealing that its importation of raw materials have been rising rapidly starting in 2010, supposedly all for export, as the company reported “minimal” amount in local sales.

Thus Sevilla warned the Senate: The BOC audit of Mighty could lead to findings of additional huge tax liabilities of the company.

Now, according to our own sources in the BOC, the bureau indeed demanded payment of exactly P852,904,552.09 from Mighty, based on the “reassessment” of the company’s obligations in its customs bonded warehouse.

In fact, from what we gathered, the reassessment covered the year 2013 alone—and only for additional import duties that Mighty, er, forgot to settle in its bonded warehouse operations.

But what about the previous years and other taxes, boss, would they be forgotten soon by the BIR, since based on the memo issued by the DOF to both the BOC and the BIR, the “unpaid” excise tax on Mighty’s production of cigarettes could be a staggering amount?

Interestingly, Mighty did not even contest the BOC reassessment, because the company immediately settled the P850 million slapped by the bureau on it.

Was it an admission of guilt? Was it a way to cover up similar practices in previous years? Or was it a preparation for an amnesty, although everybody knows that the BOC could not grant amnesty to what was known in the bureau as “habitual offenders?”

Yet, in its media campaign, Mighty has insisted that it was always paying to the government the “correct” taxes, and it would not as much as say a whimper against the BOC reassessment.

It would only lead us to two possible scenarios: one, the BOC evidence against Mighty was ironclad and, two, the BOC actually has to uncover all of its liabilities. Look, boss, Mighty was just too glad to pay up!

And what about the “criminal charges” that the Aquino (Part II) administration has been bragging about it would bring to those who committed “economic sabotage,” or even just the ordinary crime denying the government hundreds of billions of pesos called smuggling?

And how come the world has yet to hear from the BIR regarding the Mighty case, despite the urgent memo from the DOF boss, while the BIR has been running after everybody else—and shaming all no end? Same old, same old!