DAVAO CITY—Undervaluation of goods due to the longtime practice of benchmarking, tara system, connivance among Bureau of Customs (BOC) officials, staff, traders and businessmen are among the main culprits that contribute to the lower-than-expected Customs revenues.
Customs Commissioner Ret. Police General Isidro S. Lapeña, in an interview with the BusinessMirror, has admitted that due to these illegal practices, about “two-thirds,” or roughly 66.67 percent, of realizable revenue is “lost.”
Lapeña said he discovered some methods used to estimate collectible taxes that skip actual examination and valuation.
He cited the so-called benchmarking to estimate taxes to be collected for each container van of shipment.
Lapeña said when he took over the Customs post, the benchmark for each container van is P40,000. This poses a problem since what if “the van would contain goods amounting to P1 million, for example.”
“By the value-added tax alone, at 12 percent, we would easily have P120,000…so two-thirds is lost here,” Lapeña said.
Lapeña also disclosed that the Trade Counsellor of China, during his recent visit at the BOC, has stated that the value of goods leaving China reguarly shipped to the Philippines is about $42 billion on a regular basis. But when the same shipment of goods reach the Philippines, however, the value of the same goods diminishes to only $18 billion.
This, he added, means that “there is undervaluation.”
Lapeña admitted that “the dynamics, the anatomy of corruption, the tara system [inside the BOC] and because of the slow processes in the Bureau of Customs,” businessmen are forced “to look for someone who can help them facilitate their goods, of course for a certain fee.”
He noted that the government is the loser in this collusion practice where “shady fees” change hands, as these are “not taken from the own profit of the businessman, nor from the compensation due the brokers. They get it from the revenues.”
Lapeña disclosed that smugglers are usually the same legitimate traders and businessmen, “but who become smugglers [themselves] when they resort to shady transactions.”
Last Friday Customs agents raided the stores of some tenants of the DCLA mall along the Chinatown area of this city after test buys confirmed the sale in the market of counterfeit beauty-care products. Agents estimated the value of the counterfeit beauty products at P50 million.
“This is the thing that we want to address, and the short-term doables we have applied have turned out good results,” Lapeña said.
The raid last Friday was among the many operations the BOC has been conducting nationwide to remind businessmen to conduct their business the legal way.
Also, the cleansing within the BOC has allowed the agency to post “positive and all-time high collections in the history of the bureau.”
This year the Customs chief is confident the BOC would be able to reach its target of P598 billion after it hit its target monthly collection for February and March, commonly the difficult months to achieve the target due to the two-week Chinese New Year celebration when there are no transactions in China. Further, February has also the fewest number of days in the year.
Lapeña also noted that March is another challenging month due to the spillover effect of the inventory period beginning January and toward February.
The tax-collection target of the agency this year is P130 billion more than its target last year of P468 billion.