On slow days Philippine tax investigators say they comb through the obituary pages and stacks of sales invoices. On other days they get lucky and get to track the infrequent Porsche or Ferrari.
The poorly paid accountants and lawyers are the unlikely shock troops of Philippine President Benigno Aquino’s anti-corruption campaign, exposing to public shame those accused of cheating the government out of billions of dollars in taxes.
Rewards are few and the threat to life and limb is ever-present, but the “Run Against Tax Evaders” team of the Bureau of Internal Revenue is fueled by civic duty, its chief prosecutor Claro Ortiz said.
“It’s very exhausting and very dangerous because, you know, we tend to run after big names and big people. There is, of course some sort of risk,” he said.
His 28-member special team of lawyers is currently handling 155 cases, including that of a pawnbroker who imported a US$500,000 Lamborghini even though he had paid just US$600 in taxes in the past 10 years.
A luxury car dealer is also in trouble for allegedly cheating the government out of 68.4 million pesos (US$1.52 million) in duties for a fleet of Lamborghini, Porsche, Mercedes Benz and Maserati imports.
It would take the 49-year-old Ortiz, a father of three, as many more years to earn enough money for a Lamborghini for himself, but he is not fixated on the yawning wealth gap.
“We are some sort of a crusader. We try to correct what is wrong,” he said.
Kim Henares, Ortiz’s boss as head of the Bureau of Internal Revenue, estimates just 5 million of the 38 million working-age Filipinos pay taxes, leaving more than 22 million potential tax dodgers.
This has left the Philippines with a wafer-thin revenue base with which to fund its basic operations and provide social services. The government expects a funding gap of nearly 300 billion pesos this year.
“We’re so creative a race. If they see that they can get away with it, they will try to get away with it,” Henares said.
The thin ranks of Filipino taxpayers include 1.4 million who describe themselves as self-employed, who may include doctors and other professionals.
Philippine Finance Secretary Cesar Purisima suspects they may be paying far less than the government is due.
“Imagine if we can scare them enough to increase [annual] tax payments by 100,000 pesos each. You do that math. That’s 140 billion pesos,” Purisima said, musing on the impact of the name-and-shame campaign.
“There is nothing wrong with buying luxury cars. Everyone has the right to enjoy their wealth. But the government also has the right to collect taxes and duties,” Purisima added.
Getting Filipinos to pay the right taxes, however, can expose tax sleuths to danger.
Those in the firing line are the revenue bureau’s 70-strong team of accountants and lawyers from the National Investigation Division that develops cases out of tips from citizens as well as regular taxpayer audits.
Two of the division’s chiefs have been assassinated in the past decade.
The tax cheats often give themselves away by conspicuous consumption aimed at announcing to the world that they have arrived, according to a member of the division who asked not to be named.
The Lamborghini-importing pawnbroker accused of dodging taxes went around in vanity plates and frequented motor shows.
“If there is a report of a certain sale and apparently this was not reported, we would try to get documents from third-party sources,” the source said.
“We pick our battles. We want simple cases,” the investigator said.
If the tax evasion case involves less than 1 million pesos, the group, which received some training in the US, simply sets it aside.
The tax investigators also count billboards to compare the tax returns of movie stars and other celebrities to product endorsement contracts that they have signed.
However, most of their work is routine reading, the source said, both of sales documents and even death notices on daily newspapers. Filipinos’ creativity does not end in death, as most appear to evade death taxes.
In a sign that the investigators might be having an effect, however, Henares said at least one car dealer has privately complained to her about the impact of the campaign on luxury car sales.
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