Palace takes back BIR revamp order

BY JOSEFA L. CAGOCO, BusinessWorld Reporter Malacañang has taken back an Executive Order detailing a Bureau of Internal Revenue (BIR) reorganization that apparently caught Finance officials by surprise. The Palace on Wednesday released Executive Order 625-A amending EO 625, signed in May but only shown to reporters last week. This development also followed reports that President Gloria Macapagal Arroyo was poised to implement sweeping changes at the BIR, which has failed to meet revenue targets as of the first quarter of 2007. The bureau failed to meet last year’s target, and now faces, along with the Bureau of Customs, more pressure to perform as the government proposes to raise revenue estimates for 2008. In the rescinded Executive Order, Mrs. Arroyo placed the BIR’s Large Taxpayer’s Service (LTS) under a new office and axed the unit’s head. A program targeting tax evaders was also set up as a division, and officials then claimed the changes were prompted by the BIR’s lackluster performance. EO 625-A, however, placed the LTS back under Tax bureau chief Jose Mario C. Buñag, and retained LTS officer-in-charge Nestor S. Valeroso. EO 625 had placed the LTS under the new Office of the Deputy for Audit and Fraud Investigation, and named South Makati revenue district officer Cesar Charlie Lim as Mr. Valeroso’s replacement. The Run After Tax Evaders Program, which EO 625 said would now become a division, has been placed under the Office of the Deputy Commissioner for Legal and Inspection Group. Mrs. Arroyo on Saturday had told BusinessWorld that she was looking at changes in the BIR. Asked to comment on Mr. Valeroso’s removal, Finance Secretary Margarito B. Teves that day declined to comment, saying he wanted to discuss the matter with Mrs. Arroyo. The President met with Messrs. Teves and Buñag on Tuesday, and the Finance chief said Mrs. Arroyo had given the BIR a temporary reprieve with respect to the collection issue. Mr. Buñag, asked about EO 625, said "The EO was not properly studied." Mr. Teves was unavailable for comment Wednesday, while Mr. Buñag declined to speak further, saying he had yet to see the new Palace order. Mr. Valeroso, meanwhile, said EO 625-A restores the status quo at the BIR. "In our existing structure, we are directly under the Office of the Commissioner. If EO 625 is revoked, we are back here," he said. Asked whether the development came as a relief, Mr. Valeroso replied "If that is the assessment of top management, including the President, we have to be ready." He maintained that the LTS has and continues to do its job. "I’m not guilty. I’m trying my best to maximize our collection," he stressed. Revamping the bureau halfway through the year may be counterproductive, he added. "We are in the middle of the year. We can’t afford to have a learning curve. It will affect our collection," Mr. Valeroso said. The BIR has to collect P765.9 billion of this year’s total revenue goal of P1.12 trillion, and the LTS is expected to contribute half. Mrs. Arroyo has expressed disappointment with the P12.1-billion first quarter shortfall registered by the BIR, which threatens the P63 billion yearend deficit target. Documents recently submitted to the Development Budget Coordination Committee, meanwhile, placed the revenue target for 2008 at P1.236 trillion. Of this amount, tax revenues are expected to go up to P1.138 trillion from 2007’s P1.053-trillion target. The BIR must collect P873.9 billion next year, higher than its P765.8-billion target this year. Collections by the Bureau of Customs, meanwhile, will increase to P254.7 billion next year from this year’s P228.2-billion goal. Mr. Buñag said he was not aware of the new targets. "We will have it studied first. They will need more people if that is what they want," he said. Customs commissioner Napoleon L. Morales was not immediately available for comment. The government’s non-tax revenue target for next year, meanwhile, was pegged at P98 billion, lower than this year’s P115.6 billion. The government is looking at selling big-ticket items such as its 24% stake in food and beverage giant San Miguel Corp. and its 12% interest in Manila Electric Co. this year.