The House tax panel has approved House Bill No. 7653, which seeks to make coordinated tax fraud a separate crime with more severe penalties under the National Internal Revenue Code. 

The bill, sponsored by House Ways and Means Chair Joey Sarte Salceda, aims to curb tax racketeering by replacing the current two-year penalty for tax fraud through fake receipts with a 20-year prison sentence for syndicated efforts to defraud the government. 

However, the proposal to make the offense non-bailable was deleted by the committee to avoid constitutionality issues. 

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.”

His 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.”

The lawmaker also 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,” he 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,” he 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 calls for perpetual disqualification, in addition to 10-17 years in prison, from public office for accomplices in the government.

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

The tax code currently 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.”