Manila - European businessmen on Monday asked the Aquino administration to simplify tax payment procedures, saying less bureaucracy is key to combat rampant smuggling.

“Rampant smuggling in the country has for many years been left unchecked with no serious sustained effort to apprehend and prosecute the perpetrators of this most serious form of economic sabotage,” the European Chamber of Commerce of the Philippines (ECCP) said in a statement.

“This is one of the major reasons why the country has not been able to attract investment in manufacturing that should create jobs as legitimate local manufacturers cannot compete with smugglers who do not pay the required taxes,” the chamber said.

Citing various reports, ECCP vice president for external affairs Henry J. Schumacher said oil companies lose about P6 billion annually to smuggling, while the association of lighting manufacturers claims that almost a third of bulbs sold in the country was smuggled.

Schumacher said about 30 percent of large import commodities such as rice, other agricultural products, oil and vehicles may have entered the country through smuggling.

“Initially free ports have been used but in the meantime the smuggling has moved to other places” after the Aquino administration intensified its campaign against smugglers, Schumacher said.

“ECCP notes the recent efforts and successes by the Department of Finance and the Department of Justice in addressing smuggling and we are heartened by the pronouncements made by President Aquino and his economic team that the anti-smuggling drive will not only be sustained but intensified,” the chamber said.

However, more reforms need to be put in place to stem smuggling, ECCP said.

The chamber said the executive branch should apprehend and prosecute smugglers and their protectors in government.

As for the legislative branch, ECCP said it should pass the anti-smuggling law and slap smugglers with heavier punishments, as well as approve the Customs Modernization Act.

ECCP also called on the Supreme Court to “reform the judiciary” by appointing more judges, increasing their pay and benefits, and disciplining erring and corrupt ones so that “fair” justice could be served faster and more efficiently. “The business community understands the disappointment of the Department of Finance and Department of Justice with the TRO [temporary restraining order] ruling in favor of oil firms that are investigated for smuggling,” Schumacher said.

Tax collection agencies should likewise facilitate easier trade to discourage unscrupulous activities, ECCP said.

“At the same time as plugging loopholes in tax administration, we also call on the Bureau of Customs and Bureau of Internal Revenue to simplify and streamline payment of duties and taxes to reduce the incentive for bribery and smuggling,” the chamber said, adding that the value-added tax (VAT) system should be widely tapped as a means to detect and apprehend smugglers.

“The Bureau of Customs plays a major role but the smugglers are creative and are in many cases protected. Once BOC gets evidence it is essential that the court administration helps to catch the fish; if not, the culture of impunity will continue. Manufacturing, one of the stepping stones for inclusive growth, will not expand if many more can be made from smuggling,” ECCP said.

Source: Interaksyon; News; 27 May 2013