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Internal Revenue Commissioner Jose Mario Buñag on
Wednesday blamed poor tax collection for the first quarter of 2007
to taxes paid in advance, mostly on the request of Finance
Secretary Margarito Teves.
“Such advance payments were
made by various taxpayers upon the personal calls and requests made,
as is well-known in the BIR [Bureau of Internal Revenue], by no
less than Finance Secretary Margarito B. Teves himself to the
President/CEOs of taxpayers,” a statement released by the Office
of the BIR Commissioner said.
It said the requests made by
Teves were strongly criticized by Buñag and Assistant Commissioner
Nestor Valeroso of BIR’s Large Taxpayers Service.
“The impact of the advance tax
payments made in 2006 has affected the 2007 performance of the
BIR’s Large Taxpayers Service in particular, which would have seen
a more remarkable increase,” it added.
The statement said the practice
of advance tax payments was prohibited when Buñag was appointed as
commissioner.
“While it should be noted that
there is nothing illegal in making the advance payments because the
Tax Code allows taxpayers to pay their liabilities on or before
fixed dates, huge advance payments distort the collection
performance, the goals for which are set on a year on year basis,”
the statement said.
Advance payments made for a
particular year are automatically integrated as part of the goal of
the ensuing year plus the corresponding growth rate, the statement
said.
Interviewed later, Buñag said if
there was a shake-up, it should start with Teves “and the other
agencies of the finance sector.”
A tax audit report of the
Department of Finance showed that the BIR topped its collection for
the first quarter of 2006 but was still short of target for the same
period this year.
The BIR collected P143.1 billion
in the first quarter of 2007, 6.0 percent higher than last year.
However, the collection was lower than nominal gross domestic
product growth of 9.9 percent.
“The BIR collection effort
dropped from 9.7 percent to 9.4 percent of GDP. The BIR is short of
its target by P12.1 billion but net of taxes on government
securities, the shortfall is lower at P10.3 billion,” the report
said.
The bureau also failed to attain
the programmed level of efficiency (P10 billion for first quarter),
in which the level was negative P530 million for first quarter.
Efficiency is the balance in the
collection after netting out the impact of macroeconomic factors,
change in tax rate and supply developments beyond the influence of
the tax authority.
The report noted that the
divergence of macroeconomic indicators from programmed levels, on a
net basis, boosted collections by P0.2 billion.
The DOF attributed the dismal
collection to a lower inflation rate, low interest rates on loans,
low interest rates on deposits, and low T-Bill rates.
On the other hand, higher real
growth boosted collections along with a high volume of deposits,
loans and taxable government securities.
Other factors that dampened
collections include the removal of the 70-percent input VAT cap
(estimated at P2.6 billion), and the frontloading of “sin”
products to avoid an 8-percent rise in excise tax rate (about P1
billion).
The report recommended the
immediate implementation of reforms such as the strengthening the
tax audit team, empowering the finance secretary to examine tax
returns, appointing a representative from the National Statistics
Office, Commission on Audit and Department of Budget and Management
to the team, and wider use of data from third parties.
“The DOF will look at the
current tax administration of the BIR and strengthen weak areas, and
focus more on those spots to meet the target,” Finance
Undersecretary Gil Beltran said.
He said the BIR could improve on
collecting the capital gain tax, corporate income tax and excise tax
on petroleum.
--ABS-CBN Interactive, Likha Cuevas-Miel and
Angelo S. Samonte
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