Accounts of increased cases of money laundering in the Philippines due to the spread of Philippine Offshore Gaming Operators (POGOs) in the country concerns the Commission on Human Rights. This was the subject of Senator Richard Gordon’s privilege speech in Senate on Tuesday, 3 March 2020.
Illicit financial flows (IFFs), defined in the narrow and broad sense, refers to funds that are unrecorded and illegally earned, transferred, and utilized from one border to the other. Even if the capital is earned through legitimate means, capital transfer abroad in violation of domestic law renders the capital illicit. According to Senator Gordon, some US$446 million (P22.69 billion) was smuggled into the country allegedly by 46 individuals over a span of five months. This pronouncement, if proven to be true, validates the most recent analysis of Washington-based Global Finance Integrity (GFI), which ranks the Philippines amongst the 30th biggest countries with the largest illicit money outflow.
The Commission, as a national human rights institution, recognizes the negative impact of IFFs to the realization of civil, political, economic, social, and cultural rights. Tax abuse and illicit financial flows, not only undermines the rule of law, it also perpetuates inequality and poses a serious challenge to meeting Target 17.4 of the Sustainable Development Goals on Debt Sustainability.
In the face of low or missing revenues, some governments may borrow more money from foreign countries—adopt retrogressive measures that may affect public spending on infrastructure, health, and education or may raise revenue from other resources through regressive tax structures. This, in turn, limits government efforts to provide basic social services that benefit the most marginalized and vulnerable persons and groups.
As cases of tax evasion costs the Philippine government over P300 billion in revenue per year, and with less than 1% of more than 1,000 alleged tax evaders convicted in the past 13 years, such figures suggest that achieving Sustainable Development Goals will be an uphill battle in the face of IFFs.
Thus, the Commission urges the government to practice effective fiscal management through proper taxation of all companies and individuals to ensure that greater tax revenues be spent towards a future where all individuals enjoy at least the minimum levels of satisfaction and realization of all human rights, while calling upon all relevant agencies, departments, and bureaus to act collectively to prevent illegal migration and IFFs in the country. A motu proprio investigation on the multimillion-dollar cash flow into the country may help in this regard, especially if addressing the issue will translate to better services to every Filipino. ###