TAX cheats are costing the Government millions of dollars in lost revenue every year. Figures obtained by the South China Morning Post reveal that the sum unpaid since 1988 was more than the entire budget this year for the Health Department, the Customs and Excise Department or the fund for universities and polytechnics. It represents the equivalent of building 14 hospitals, such as the 600-bed North District Hospital, and is more than 400 times the total allocated this year for the development of the performing arts. The Inland Revenue Department disclosed that $14.55 billion in tax bills remains outstanding since 1988. Of that, $13.69 billion is in arrears and $860 million has been written off. Allan Gill, deputy commissioner of the Inland Revenue, defended the sums. ''If you look at the figure, it is quite a large sum, but I don't think it is any bigger than anywhere else in the world,'' he said. ''I don't think it is getting worse than in previous years. It increases every year, but then so does the amount of tax due.'' One of the problems is that tax is not deducted on a ''pay as you earn'' basis. The department keeps computer files of taxpayers which it uses as the basis for sending out returns every May. Companies are obliged by law to let the department know whenever they hire someone and what their salary is. They are also compelled to alert the department when someone leaves their employment and to warn them if they suspect the former employee is liable to leave the territory. But there are flaws in the arrangement. With employees moving flats and jobs often, it can be hard to track them down. Furthermore, the department admits that it concentrates mainly on chasing up high earners, often taking months to chase up those on low salaries. Mr Gill admits that once a person who owes tax has left Hong Kong there is little that can be done to force him to pay up. ''We might talk to the Immigration Department asking them to advise us should they return. If they do, then we can seek a court order obliging them to pay up. But if they remain outside Hong Kong, there is not much we can do. We could introduce a system which forces people to demonstrate they have fully paid up their tax dues before they are allowed to leave Hong Kong, but with the large flow of travellers through Hong Kong, that is really impractical. We write off tax every year.'' Mr Gill said he had three weapons at his disposal in the battle against tax dodgers, but none of them was foolproof. First, the department could take out a ''stop'' order to prevent people from leaving the territory if they were suspected of owing tax. This involved getting a court to issue the order and then seeking the compliance of the Immigration Department. Second, the department could seek a Recovery Order from a court which enabled it to demand the money owed from any person or organisation that owes money to the tax dodger, such as an employer. The third party was notified in writing that the debt had been transferred from the tax dodger directly to the department. This Recovery Order could also be used against the tax dodger's bank account, obliging his bank to hand over any savings the dodger may have to cover the debt. Third, the department could use the normal civil court measures for the recovery of debt available to anyone who believes they are owed money.