Press Releases

House tax panel approves bill to criminalize tax racketeering; Committee increases penalty for syndicated tax fraud from 2 years to 20 years but keeps it bailable

May 11th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) sponsored House Bill No. 7653, which the House tax panel approved today, to make the act of “coordinated” tax fraud a separate crime with graver penalties under the National Internal Revenue Code, as amended. The House tax panel, however, deleted the provision in Salceda’s proposal which would have made the offense non-bailable.

In his sponsorship of the measure, Salceda said “Such nefarious activities must be defined and criminalized since it constitutes economic sabotage, following the doctrine that taxes are the lifeblood of the state.”

Salceda’s proposal defines tax racketeering as “attempts to engage in any coordinated scheme or operation to repeatedly or consistently evade or defeat any tax imposed under this code through the fraudulent use of receipts.”

Salceda pushed for higher penalties on the offense, citing that even if the BIR tries to catch incidents of large-scale tax fraud, “it will not have a proportional deterrent effect.”

“Despite these efforts, however, they will be charged with crimes that ordinary or smaller tax violators can be charged with. That is because the Tax Code enumerates various forms of tax evasion as criminal liabilities, but does not address the systematic and coordinated scheme to evade taxes,” Salceda said.

Salceda also proposed that the crime be made non-bailable.

“The measure seeks to provide stiffer penalties depending on a person’s degree of participation in the offense as deterrent to the commission of such crime. We must remember that other than uncollected revenues, investigating and prosecuting tax crimes place added burden not only to tax collection agencies but to our courts as well,” Salceda said, justifying the measure.

In order to cure questions of constitutionality of making the offense non-bailable, Salceda proposed that the prescribed penalty be increased to reclusion perpetua.

However, during the discussion of the Committee, members moved to retain the original 17-to-20-year penalty, and keep the offense bailable.

Salceda acceded to the request but also pointed out that “at least the bill provides a stronger deterrent.”

The bill also penalizes accomplices in government with perpetual disqualification from public office in addition to 10-17 years in prison.

“They cannot operate without friends in high places. So, that has to be punished more stiffly, as well.”

The tax code current penalizes tax fraud through fake receipts with a two year prison term, but Salceda emphasized that “these pertain to individual crimes, not syndicated efforts to defraud the government.”

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