Amnesty intentional
Uh-oh, this is bad: The business sector just asked the government for another tax amnesty as a priority economic policy.
It would mean the blanket exoneration of huge cheating in tax payments.
Sure, the economic team of the motorbiking Duterte Harley earlier hinted that it could go ahead with a tax amnesty somewhere in the future.
There—nothing was definite!
Last week, the biggest business group in the country, the Philippine Chamber of Commerce and Industry, or PCCI, which held the 43rd Philippine Business Conference, nevertheless presented its usual wish list for government action.
Among the measures sought was the call to Congress, i.e. both the Senate and the House of Representatives, to enact laws on tax amnesty.
The biggest item on its agenda was the law granting a general amnesty to all tax liabilities in 2015—plus all the prior years.
Now the government did not really have some sterling records in tax amnesty.
During the early days of Martial Law, the dictator Ferdinand Marcos issued seven consecutive presidential decrees giving all sorts of tax amnesty.
They did not yield a lot of revenues, and they only managed to wipe out the liabilities of big business, including the crime of tax fraud.
The same thing happened under the revolutionary government of President Corazon Aquino, who issued five executive orders for tax amnesty that yielded less than 2 percent of total revenues.
Guess what—the five EOs also succeeded in doing away with all tax cases of the big boys!
Perhaps learning the lesson from the past, our beloved government only succumbed to five tax-amnesty programs in the last 25 years, the last one under the cute administration of Gloriaetta in 2004.
Those five programs only yielded less than P20 billion.
And now the Duterte Harley administration hinted that it was open to another tax amnesty, in fact the mother of all tax amnesties, because it would be the only one in the next 25 years.
Even under new administrations? Perhaps Duterte Harley could stay in power until he would reach the ripe old age of 100 years.
Anyway, the amnesty would still be a gamble for the administration. Think tanks like IMF, the International Monetary Fund, for instance, frown on a tax amnesty. Historical data already showed it could only make governments poorer.
Indeed, with expectations of an amnesty, tax evasion could just become intentional. Taxpayers simply would have no compunction in cheating. The amnesty would wash away their liabilities, anyway. And so the amnesty could only encourage more cheating.
The administration will have to engage in a little psy-war, if and when it adopts the amnesty proposal of the business sector. According to the economic team, the critical aspect of the program will be the timing.
You know—just keep everybody guessing! Business thus will still have to weigh the risks of intentional cheating. The BIR could file criminal cases against them. What if the amnesty will not happen?
From what I gathered, the administration also seemed open to some tradeoff with Congress regarding the amnesty program. For instance, the Department of Finance already put forth the lifting of the bank secrecy law as condition for the amnesty.
Indeed, the Philippines is one of only three countries—Lebanon and Switzerland being the other two—that still enjoy restrictive bank secretary laws.
And so small institutions like the Luzon Development Bank could accept deposits from some top government officials by the hundreds of millions.
Meantime, while the administration kept business hanging on the proposed amnesty, the BIR still must do its job of running after tax evaders.
Or else, without the risk of the BIR gang audit, everybody could just gamble on some future amnesty.
And with the BIR, the issue has always been corruption.
While Duterte Harley already fired big bosses in Bureau of Customs, or even two Cabinet members, he has not fired anybody in the BIR.
Maybe he has yet to get just a whiff of corruption there.
