The Duterte administration should look into the possible collusion between Bureau of Customs (BOC) officials and large steelmakers because the government is losing hundreds of billions of pesos due to unabated smuggling at the ports, especially steel, according to Buhay Rep. Lito Atienza. He said lost tax revenues rooted in corruption could be enough to fund the country’s social services and infrastructure projects. (See, “P200B lost every year to unabated smuggling at the ports—lawmaker,” in the BusinessMirror, September 16, 2019).
Atienza can’t fathom why the BOC is reluctant to adopt the pre-shipment inspection of all cargo vans coming into the country. “Obviously, the government—the BOC and the Department of Finance—don’t want to know what is inside the container vans. They are merely dependent on the declaration of importers. Industry analysts say that a minimum of P200 billion is lost every year due to unabated smuggling,” he said.
The lawmaker said the Customs Modernization and Tariff Act was signed four years ago, but the pre-inspection provision specified in Section 440—that container vans should be inspected at their ports of origin—remains unimplemented. “They [vans] should be cleared at the port of origin before shipment. When the Duterte administration came in, we expected that it would be implemented, but until now, nothing has changed. Obviously, the DOF is not keen on its implementation.”
Atienza said there are around 12,000 container vans coming into our ports everyday. Only a small fraction gets inspected, while the rest are allowed to come in, with some even using the green lanes, which is tantamount to giving smugglers a holiday.
The new tax measures approved recently by the House are not needed if the BOC collects the right amount of duties and taxes, the lawmaker said, adding: “Instead of introducing new tax reforms to raise revenue for the government’s social services and infrastructure programs, the government should be looking into the issue of smuggling at BOC.”
Smuggling at the ports should have no chance flourish because our Customs officials know how smugglers operate: One method involves misdeclaration of imported items. Another is by undervaluing the shipment. Misclassification is also a form of tax and duty evasion, which is carried out by erroneously classifying the imported goods. Unfortunately, smuggling is still rampant despite the President’s recent move of firing scores of Customs officials.
Dante Jimenez, chairman of Presidential Anti-Corruption Commission, earlier confirmed that they are investigating the importation documents submitted by big steel manufacturers that bear signs of import “misdeclaration.” He said the PACC is probing into the real declared value of the imported billets over the past 10 years because during those times the steelmakers declared lower amounts of duties and taxes.
The PACC said imported steel billets from several countries displayed big discrepancies in terms of size, description and volume, showing possible misdeclaration, thus, improper taxes paid. Giving no details, the PACC said it is preparing tax evasion cases against a big steel manufacturer and some BOC officials suspected to be involved in smuggling.
As Atienza pointed out, smuggling costs the government hundreds of billions in lost revenues. But beyond monetary losses, this scourge affects everybody because it can also destroy local industries, and hence people’s livelihood. Worse, the profits derived from smuggling only go to corrupt officials and crime syndicates. This gives the bad guys money to run their criminal activities. The government must use its vast powers to annihilate this chronic pest, before it can cause catastrophic economic and social damage.
Image credits: Jimbo Albano