Friday, August 05, 2005

Inquirer Editorial

Editorial : Slowing RATE

Inquirer News Service

AFTER PROVING itself effective for three months, the Run After Tax Evaders (RATE) program of the government appears on its way to a shelf or, maybe, a graveyard. The irony is that the people who are taking it there are not the ones who are threatened by it but those who are duty-bound to ensure its success.

This much we can discern from the recent flurry of statements coming from no less than the leading members of President Gloria Macapagal-Arroyo's new economic team. Which makes it even more intriguing.

At the peak implementation of RATE -- from the week after it was launched in March and up to June -- the nation saw an invigorated Bureau of Internal Revenue (BIR) filing at least two tax evasion cases every week against prominent personalities and big business establishments in an effort to drive up tax collections. Indeed, the government itself touted RATE for its role in significantly improving the BIR's collection during that period.

Thus, it's rather strange that BIR Deputy Commissioner Jose Mario Buñag, who has been less than a month in his post as interim head of the BIR, the agency primarily tasked with implementing RATE, has on several occasions indicated that he prefers to go back to the old practice of allowing tax evaders to settle deficiencies in their tax payments as a first option, instead of prosecuting them for tax evasion.

Veteran BIR officials say that "compromise settlements" never significantly raised tax collections. Worse, they promoted "a culture of tax evasion."

And even before this backsliding to a failed practice has been clearly adopted as official policy, the BIR proceeded to translate Buñag's preference into action. According to a recent Inquirer special report, the agency last week "declined to file a case against an unnamed tax evasion suspect." This move -- or "non-move," if you will -- is rather surprising: first, because it definitely veers away from RATE; and second, because it seems to follow the call of Trade and Industry Secretary Peter Favila, another new member of Ms Arroyo's economic team, to go soft in reporting on people facing tax evasion charges. This gives the impression that the government is now implementing a policy of leniency for tax cheats, even if the policy has yet to be declared officially.

Finance Secretary Margarito Teves, Buñag's immediate boss, buttressed this impression by saying that the weekly filing of criminal cases against tax evaders will no longer be a matter of course. He justified this decision as a move to ensure the quality of cases filed-as against RATE's seeming focus on quantity-and not a sign that the government is wavering on its tax drive. If that is the case, then RATE or the filing of tax evasion cases for that matter, may in effect be "dead in the water," as some BIR officials put it.

Of the 27 complaints filed under RATE since March, only one has been submitted to the Court of Tax Appeals for resolution. Finance officials blame the justice department for not acting on the cases. The justice department, for its part, is blaming finance officials for their lack of experience in criminal prosecution and proceedings. Chief State Prosecutor Jovencito Zuño noted that the BIR files cases without sufficient evidence. While BIR officials admit their inexperience with criminal cases, BIR Deputy Commissioner Kim Henares says it's not all their fault. "DOJ doesn't have any idea about tax laws," she countered.

If this pointless bickering between the two agencies is allowed to go on, then the new finance chief will surely never get the "quality cases" he wants. Meaning, RATE is done with.

And yet, this problem between the BIR and the DOJ is not really insurmountable. It is just a matter of forging a closer partnership, closer coordination and closer cooperation of complementing each other; of one filling what the other lacks; of pointing out what one must do to make the other more effective in the arena of battle. Unfortunately, instead of threshing out the kinks, the officials of these two crucial agencies are throwing stones at each other, if not making excuses for their inaction.

Meanwhile, RATE is fast losing the "fear factor" on which it was anchored. It is increasingly becoming impotent against suspected tax evaders, like Richard Gomez, Jose Ignacio Arroyo, Rodolfo Pineda and many other rich and influential individuals and firms.

One wonders if the emasculation of RATE is intended or if our cash-strapped and crises-laden government is still interested in seeing it succeed.

Special report: Drive vs tax evaders starts to weaken (Aug. 1, 2005)

Special report: Slow progress on tax cases frustrates RATE proponents (Aug. 2, 2005)

Special report: With RATE in decline, BIR seen reverting to tax deals (Aug. 3, 2005)

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