Wed, Feb 05, 2014 - Page 4 News List

Watchdog shows illicit money flows in the Philippines

‘BLACK GOLD’ RIVERS:Outflows have cost the government US$132.9bn since 1960 and US$277.6bn in inflows have helped fuel crime and evaded customs

AP, MANILA

An anti-graft watchdog yesterday said the Philippine government was cheated of US$3.85 billion in tax revenues in 2011, part of massive illicit money flows that totaled more than US$400 billion in the past five decades.

Global Financial Integrity (GFI) said in a report that illicit financial outflows including proceeds from crime, corruption and tax evasion totaled US$132.9 billion in a 52-year period from 1960.

Another US$277.6 billion illegally entered the country, predominantly through false invoicing of imports to evade tariffs, the watchdog said. It said the government has lost at least US$23 billion in revenue from customs evasion since 1990 and lost an average of US$1.46 billion in tax revenue each year since 2000.

The report estimated that the underground economy was equal to nearly 30 percent of GDP in 2011.

The watchdog’s chief economist Dev Kar, who co-authored the report with economist Brian LeBlanc, said illicit outflows have grown from an average of 2 percent of GDP in 1970s and 1980s to 5 percent of GDP since 2000.

“Illicit outflows drain billions of dollars from the official Philippine economy, money that could otherwise be used to help the nation’s economy grow,” said GFI managing director Tom Cardamone, an international financial crime expert. “At the same time, the illicit inflow of capital and merchandise is perhaps even more insidious: It fuels crime, grows the underground economy, and costs the government billions of dollars each year in lost customs duties.”

LeBlanc said the US$3.85 billion of lost tax revenue in 2011 was more than twice the size of the fiscal deficit and equal to 95 percent of the total government expenditure on social benefits that year.

This story has been viewed 871 times.
TOP top