As Christmas and elections approach, the taxman also cometh, and is very much in the news.

We know about Oplan Kandado, where establishments not paying their proper tax liabilities have been conspicuously padlocked – and that is a good development, because it means that the BIR is saying it means business. Nothing under the table.

The BIR is hitting tax cheats where it hurts – by temporarily closing their operations, and by exposing them to public scrutiny.

And now we have the Operation Santax Claus, which is really nothing but the stricter implementation of already existing rules and regulations on tiangge (bazaars) and other similar retail operations.

Finally, there is the campaign withholding tax plan of the BIR, where politicians and political parties are challenged to show their civic spirit by withholding 5 percent of their payments to suppliers and other campaign contractors like TV and radio stations for immediate remittance to the government.

There's nothing wrong with that in principle and, actually, it shoots two birds with one stone: it forces the politicos to also put their money where their mouths are and ensures that the government gets the tax revenues it is entitled to according to the laws these politicians themselves have passed.

It also leaves a paper trail as far as campaign expenditure reports are concerned.

Is this campaign withholding tax set to harass opposition candidates?

Is this campaign withholding tax plan some sinister plan by the administration to harass Opposition candidates?

I don't think so. It applies to all candidates, after all.

As of September 2009, the revenue shortfall is estimated to be P39 billion.

The reported revenue shortfall – the difference between actual and targeted tax revenues – is estimated to be P39 billion as of September.

How much of that will Operation Santax Claus be able to recover?

Actually nothing because the BIR doesn't expect to get anything.

They just wanted to catch into the tax base these retailers who come in for tiangge operation, etc.

So, let's go to the next one which is the campaign contribution withholding tax.

Here the BIR has a firm amount it expects to collect, but P1.4 billion is less than 5 percent of what should be raised in terms of trying to get the shortfall to close.

Are there alternative operations or Oplans that would raise more than that P1.4 billion?

The Answer is YES.

I will give two examples, both of which will raise at least P20 billion a year.

One needs legislative action, but the legislative action required is very simple. It has to do with the tax on cigarettes and tobacco.

All the legislature has to do is to change the definition of what we call "the net retail prices" that are used as the basis for determining the specific tax on cigarettes.

Currently, those net retail prices are based on October 1, 1996 retail prices.

So if you remove that October 1, 1996 retail price and you use current net retail price, you'll get P20 billion a year additional.

Can you imagine that up to now, the net retail price the BIR uses by law to determine the excise tax for a pack of cigarettes is still the net retail price 12 years ago, except for the cigarette manufacturers that started after the law was passed.

Is it any wonder Philippine cigarette taxes are practically the lowest in the world? That's P20 billion.

The second measure – which also will also yield at least P20 billion a year – is to put a stop to the smuggling of oil products in the Philippines.

How could that be achieved? It is not as hard as one
thinks.

There are measures like putting a dye in the imported oil products directed at the export zones like Subic and Phividec, supposedly for so-called "constructive exports."

If oil products being sold locally have this dye, then obviously these are smuggled.

Another measure is to check gasoline stations at random and see whether they are issuing VAT-registered receipts.

Still, another is to clamp down on the three areas that are reputed to be the main recipients of smuggled products: Subic, Phividec in Misamis Oriental, and an oil terminal in Bataan.

Still another is to accompany the ships out of these places that are supposed contain oil products for re-export until they are out of Philippine waters.

But now, the final question: Why concentrate on Santax and campaign?

If this is indeed the case, why concentrate on Santax and campaign taxes?

Answer: Because the ones paying the taxes here are the small and medium enterprises; whereas if you stop oil smuggling and use current net retail prices as base, you will be tangling with very big fish – the tax cheats and their even bigger government protectors.