BusinessWorld: Hefti shakes up BIR hierarchy

MANILA, Philippines - Over a hundred tax officials have been reassigned to new posts in order to improve tax collection but the timing, with only three months to go before the yearend, has raised concerns about the Bureau of Internal Revenue’s (BIR) collections. The changes were outlined in four revenue travel assignment orders signed by Internal Revenue Commissioner Lilian B. Hefti. Numbered 156-2008 to 160-2008 and dated August 29 and September 1, 3, and 12, the directives affected a total of 129 officials spanning the bureau’s hierarchy. The personnel changes — from deputy commissioners at the Quezon City main office to assistant revenue district officers at the district level — were the most extensive since Ms. Hefti assumed the top BIR position in the middle of last year, and followed the reshuffling of thousands of examiners based at the districts in May and June. Majority of those covered by the latest travel orders were ordered to report to their new assignments by September 16, and a few, the next day. The deputy commissioners involved were Lucita G. Rodriguez, who handled the tax reform administration group, and Danilo A. Duncano, who oversaw special concerns. They exchanged places. Most noticeable, however, were new officials assigned to the Large Taxpayers Service (LTS)-regular group, which collects bulk of the unit’s revenue goal. The LTS is assigned with collecting more than half of the bureau’s P845-billion goal for this year. "It is apparent that the group has been overhauled," said a partner at an accounting firm who asked for anonymity. Finance Secretary Margarito B. Teves, who co-signed the travel orders of officials based in Metro Manila, justified the move. "It is management’s prerogative to reshuffle with the end objective of enhancing revenues," he said in an interview. "Some people might have stayed longer than allowed in their positions, so it is healthy to rotate them, and upgrade those who have performed well and put those who did not in positions lower than what they held..." Nelson M. Aspe, the tax bureau’s deputy commissioner for operations, said the move hewed to a three-year reshuffling rule mandated by the Tax Code. This was also the justification cited for the reshuffling of examiners in May and June. Section 17 of the Code states that officers involved in assessment or collection are not allowed to remain in the same post for more than three years. This is to prevent overfamiliarity between officers and taxpayers. The same section also allows the commissioner to assign or reassign officials and employees "without change in their official rank and salary, to other or special duties connected with the enforcement or administration of the revenue laws as the exigencies of the service may require." Mr. Aspe claimed the current wave of reassignments involved "matching the right people with the right assignment in the eyes of the appointing power." Some posts, vacated through retirement or resignation, also needed to be filled up. The tax bureau, based on a report by the Treasury, collected P532.1 billion in the eight months to August, for a 12.5% growth year-on-year. It is behind in its collections, and must collect P74.7 billion this month if it is to keep track with its P606.8-billion goal for the first three quarters. It was supposed to collect just P60.946 billion this month, based on the monthly revenue program drawn by the Finance department. Its collections contracted by 0.8% in August, totaling P78.9 billion versus P79.6 billion last year. Messrs. Teves and Aspe denied the reshuffling had anything to do with saving officials from sanctions under the Attrition Law, or that the reshuffling itself constituted punishment under the law. The law requires an official or employee to stay in one position for a whole year for a fair appraisal of performance. It took effect in 2006 but no one from either the tax or Customs bureaus has been removed from office or reassigned as a result of poor performance. "[The reshuffling is] different because under the attrition law, [officials and employees] have to be evaluated separately," Mr. Teves said. The Finance chief said he had directed the tax bureau to go through a list of underperformers last year. Mr. Aspe said the list, initially consisting of 51 names, should be finalized this week. While there were some who fell below target in 2006, none breached the 7.5% shortfall margin that would result in dismissal. Tax experts questioned the timing of the reshuffling, noting only one quarter is left before the year ends. Catherine T. Manahan, tax director at Isla Lipana & Co., said the bureau’s revenue goal was at risk since officials need time to adjust to their new assignments. "Is it good to reassign people at the latter part of the year ... when the bureau is chasing a goal?," she asked. The partner at the other accounting firm pointed out that officials need time to plan and execute the steps to achieve those plans. He also pointed out the implications to the implementation of the Attrition Law. "How do you evaluate 2008 performance when people are transferred more than halfway through the year?" - BusinessWorld