Tax chief wants target revisions

REPORT FROM BUSINESSWORLD The Bureau of Internal Revenue (BIR) on Thursday declared it was back in business after evading a shake-up traced to collection slippages. Its chief, however, claimed the government needs to reconsider its revenue assumptions. "Whatever confusion was created has been removed," BIR chief Jose Mario C. Buñag said, referring to Executive Order (EO) 625-A which repealed EO 625. The earlier order, shown to reporters last week, placed the BIR’s Large Taxpayer’s Service (LTS) under a new office and axed the unit’s head. A program targetting tax evaders was also set up as a division and revenue officials were told to prioritize cases of tax fraud. The amendatory order, released on Wednesday, returned the LTS to Mr. Buñag’s office and retained its officer-in-charge. The Run Again Tax Evaders (RATE) program, meanwhile, was moved to the Office of the Deputy Commissioner for Legal and Inspection Group. Mr. Buñag said EO 625 had caused worry in the bureau. "There was some anxiety because we didn’t know what the first EO was all about, and what its effect would be on the structure and the organization." The tax chief said he agreed with the RATE transfer: "Of course as commissioner I still have the ultimate responsibility but on a more immediate basis, the deputy commissioner will be the one handling the program." "We just tried to suggest modifications to ensure that provisions under EO 625-A are consistent with existing laws and EOs and in line with the BIR organizational structure and would strengthen the RATE program," Finance Secretary Margarito B. Teves, who met with President Gloria Macapagal Arroyo and Mr. Buñag on Tuesday, said Thursday. The BIR’s concern now is to continue its job and, hopefully, meet expectations. But Mr. Buñag contends some these expectations are not entirely reasonable. For January to March, the BIR collected P143.1 billion, below the P155.2-billion target. For the year, it needs to raise P765.9 billion, more than half of the total revenue goal of P1.12 trillion. "The so-called slippage should be considered in context," Mr. Buñag said, citing value-added tax collections which are premised on an inflation rate higher than the actual. Finance Undersecretary Gil S. Beltran said the target inflation rate was 3.3% while the actual rate was 2.7%. "That the means the level of prices under the forecast is double [than] the actual rate ...We have to understand why there’s a slippage," Mr. Buñag said. He insisted that targets have to be adjusted to reflect the prevailing macroeconomic environment. "I’m saying it’s not as if the goal is absolute and inviolable and not subject to adjustment. It should be really subject to adjustment. It’s based on assumption, It may or may not fire out," he said. "At the end of the year they should see. They should not judge whether the BIR and the [Bureau of Customs] worked hard enough or not. That’s my position. They should be given a year to determine whether we performed well or not." Mr. Beltran said a review would be undertaken after the June figures come in, but he clarified that it would for macroeconomic assumptions, not the targets. Assumptions are adjusted "if there is a change and if the change is significant," he said, pointing to the growth forecast of 6.1% while actual growth in the first quarter was 6.9%. Mr. Buñag, however, said changes had to be made. "[T]he government practice has not been to adjust targets but to explain [a] shortfall. The setting is a bad practice because it makes the government look bad, not only the BIR, but the government. Why don’t they adjust the targets?" Mr. Beltran said "targets don’t matter" because they can be explained in context. "They matter only because we are budgeting the amount." "It will be the decision of the Cabinet secretaries to change the targets or to formulate measures to get them back in line," the Finance official added. — Josefa L. Cagoco/BusinessWorld Palace reversal seen to have little impact Businessmen on Thursday said the effect of Malacañang’s about face regarding a revamp at the Bureau of Internal Revenue (BIR) would be limited as the reorganization had not been implemented. Sergio R. Ortiz-Luis, Jr., president of the Employers’ Confederation of the Philippines, said it was the Executive’s prerogative as whether to amend an order if intervening reasons arise. Federation of Filipino-Chinese Chamber of Commerce and Industry, Inc. President Francis Chua said the amendment was a "welcome move, in a sense that ... with proper due diligence with all concerned stakeholders, [President Gloria Macapagal Arroyo would] make necessary adjustments." Peter L. Wallace of the Wallace Business Forum said "if [the order] had been put into effect and then reversed, then definitely this would have a negative effect on business. But if it was rescinded for another one, this doesn’t have any impact." However, he added that "this doesn’t send a good signal of strong planning, to come out with one thing and a little bit later change it. We have seen a little too often that decisions were made without full research and work done prior to coming out [with the order]." Mr. Wallace and former Socioeconomic Planning secretary Solita C. Monsod both cited the seeming absence in Mrs. Arroyo’s administration of the "complete staff work" for policymaking demostrated during the time of President Fidel V. Ramos. Ms. Monsod said the situation of taking back an Executive Order "merely creates embarrassment for the President," and that the "policymaking process" of the Executive should be studied. She added that BIR Commissioner Jose Mario C. Buñag’s statement that Executive Order 625 calling for a bureau revamp had not been properly studied was an "indictment" of him and Malacañang. Mr. Ortiz-Luis, meanwhile, said retaining of the composition of the BIR was preferable. A change in officers who will have to be reoriented "might further deteriorate collection." Mr. Chua said the focus should be less on who is in charge but on implementing the proper revenue measures. He said the revenue targets were a "tall order", but added the government had to maximize collections for its programs "At the end of the day, it’s a balancing act," he said. — P. C. H. How/BusinessWorld