MANILA — A middle-class woman is headed to jail for tax evasion. That wouldn't make headlines in many countries, but it's big news in the Philippines. It was enough to send President Benigno Aquino reaching excitedly for his phone during an interview this week to retrieve a message about the case from his tax chief. Businesswoman Gloria Kintanar had just exhausted her appeals and would become the first tax evader in Philippine history to be jailed - once authorities deal with her claim of illness at the hospital where she is under arrest. “Once her claim is verified ... she will be escorted to jail to serve her sentence,” Aquino told Reuters, brandishing his mobile phone. “Finally somebody is going to go to jail for a white-collar crime.” With such victories, Aquino says he is puncturing a culture of impunity that is at the heart of decades of sub-par economic performance in the Philippines and has mired it in poverty. The Philippines, a US colony until 1946, was one of Asia's wealthiest nations in the 1950s but now one-third of the 94 million population lives below the poverty line. Growth was anemic and infrastructure remains mostly woeful. In the intervening years, the Philippines has promised much but delivered little. But a growing number of analysts and investors say this time the Philippines promises to leapfrog into a higher growth pattern with signs that Aquino is serious about tackling old problems of graft and tax dodging. “The attitude has changed, I think,” the 52-year-old bachelor said at the Malacanang presidential palace, a few days after marking two years in power. “We have people who had given up on the country (who are now) coming back.” Aquino is being helped by low interest rates, improved fiscal management, and a confident middle class of consumers whose spending is fueled by the huge $1.6 billion in monthly remittances from millions of Filipinos working overseas. The economy grew 6.4 percent in the first three months of the year, second only to China among Asian economies, and Aquino told Reuters he expected it to accelerate in the second quarter. In a landmark victory, Aquino succeeded in his bid to impeach the country's Supreme Court Chief Justice Renato Corona on corruption charges in May. Next in the firing line of the gun-enthusiast president is his predecessor Gloria Macapagal Arroyo, who is under arrest awaiting a trial on graft charges. Just as important as Corona's ouster, the impeachment vote by a majority of senators showed that Aquino can control an often unruly Congress - boding well for the passage of long-delayed tax reforms that are crucial to boosting weak revenues and securing a coveted rise to investment-grade credit status by major ratings agencies. “The governance issue which has always been the problem of the Philippines for many years has somehow turned around, and that is what we have seen with the new administration,” said Maria Theresa Marcial-Javier, senior vice president at BPI Asset Management, which manages more than $16 billion in assets. Aquino boasted that the Philippines was now able to borrow at rates equivalent to several notches higher than the country's current sovereign rating, helping to save it about $1 billion in interest rate payments last year. “Just to be a little bit diplomatic, I won't mention which countries we were compared to of the first world,” he said. Skeptics say that Aquino, from a blue-blood Philippine political family with a mother who was president and a father a slain democracy hero, has been more talk than action. His high-profile impeachment of Corona has not been matched by convictions lower down the chain of corruption, something he says will take time. The tax evasion case that finally resulted in a four-year jail sentence for businesswoman Kintanar began in 2005, showing how slowly the wheels of justice turn here. Previous tax evasion charges against influential figures such as former first lady Imelda Marcos - now a congresswoman - and one of the country's richest businessmen, Lucio Tan, have been dismissed by courts. Aquino insisted that the flow of convictions would pick up as his efforts to go after tax cheats and push for quicker cases take effect. He aims to raise tax revenue as a ratio of GDP to 15 percent by 2016, around the same level as Malaysia, from about 12 percent now. “Pretty soon I think, I won't give you a specific time, there will be a deluge of convictions,” Aquino said. — Reuters
