Manufacturers ask new government to curb smuggling
With Congress again unable to pass the anti-smuggling bill, domestic manufacturers want the incoming administration to put in place several interim measures that will curb smuggling through the issuance of executive orders (EO) or department administrative orders (DAO).
Jesus L. Arranza, chairman of the Federation of Philippine Industries (FPI), said the new government should not burden the people with new tax measures without plugging the estimated P125 billion in combined duties and value-added tax (VAT) leakages at the Bureau of Customs (BOC) first.
One anti-smuggling measure that can be implemented immediately, Arranza said, is the real-time electronic transmittal of the incoming ship’s inward foreign manifest (IFM) to the industry associations and Bureau of Internal Revenue (BIR).
Through the IFM, which contains information on the goods contained in a vessel as well as their quantity and origin, the BIR and industry groups will be able to cross-check immediately the underdeclaration and misclassification being done by unscrupulous importers and smugglers.
Right now, Arranza said the IFM is only being transmitted to the BOC and repeated requests by the FPI that copies be sent also to industry associations and the BIR on real-time have fallen on deaf ears.
Another interim measure, Arranza said, is the electronic transmittal of all import entries to the BIR, especially the bill of lading that contains the value of the incoming goods. When transmitted immediately to the BIR, these import entries will allow the BIR to detect undervaluation and prevent huge losses in the payment of value-added tax and duties.
“While the anti-smuggling bill is still pending, these measures can be done through the issuance of an EO or administrative order from the Department of Finance (DOF). These are the fastest means to curb smuggling,” Arranza said.
He noted that smuggling has ripple negative effects as aside from being a major source of revenue losses, it also makes the domestic manufacturers uncompetitive versus the grossly undervalued imported goods.
He cited, for instance, the tire manufacturing sector in the country. From six manufacturers, the country now only has one tire producer in Yokohama as the flood of smuggled tires went on unabated.
“Less manufacturing firms means less jobs and less income tax. That is why the FPI keeps on saying that the Customs is our first line of defense,” Arranza said.
He said for the past six years, the IMF records showed that a total of $ 45 billion worth of imported goods entered the country annually. The BOC, on the other hand, only recorded $ 32 billion worth of imported goods annually, for a huge disparity of $ 13 billion per year.
This means for the $ 13 billion in importations that the BOC failed to capture, the government lost about P125 billion annually from the uncollected VAT and duties.
And in one of the Senate hearings, Customs Commissioner Napoleon Morales admitted that according to DOF, the revenue leakage at the BOC is about P65 billion per year.
By plugging these holes at the BOC, Mr. Arranza said the new government will be able to collect at least P65 billion in additional revenues without necessitating new tax measures that would make the people suffer.
“Just like in this administration, the FPI is willing to help our new President in the fight against smuggling, not for politics but to save the local industries, save the livelihood of the farmers and workers, and raise revenues to allow the government to come up with better social programs,” Arranza said. (PNA)
