Manila cracks down on tax evaders

The Philippine government has started a crack-down on firms dodging payment of taxes in an effort to bridge the country's ballooning budget deficit, officials said yesterday.

Yesterday, President Gloria Macapagal-Arroyo warned anew private companies to pay taxes properly "or face the full force of the law". The President's stern warning came as government lawyers filed tax evasion charges against two business firms, even while preparing cases against 298 other "tax cheats".

"I asked the BIR (Bureau of Internal Revenue) to pursue these tax evaders using the full force of the law, without fear or favour," the President said during celebrations of the tax collection agency's anniversary in Manila yesterday.

The President had initially ordered the closure of two firms found under-declaring their value added tax.

Earlier, the Department of Finance blamed the poor tax collection for the widening budget deficit gap which between January and April alone stood at P82.96 billion ($1.6 billion).

If the trend continues, Manila would be exceeding its target deficit ceiling of P130 billion ($2.6 billion) by the end of the year, imperilling the government's already over-burdened coffers.

At the same time, the National Bureau of Investigation is monitoring other banks which are authorised to accept tax payments after the arrest of a bank manager who was allegedly involved in diverting P203 million in taxes paid through his bank, into four private accounts named to fictitious persons.