May 25, 2006 (STAR) Internal Revenue Commissioner Jose Mario Buñag’s fate will be decided by Finance Secretary Margarito Teves, his immediate superior, Malacañang said yesterday.

Executive Secretary Eduardo Ermita said the Palace will wait for the recommendation of Teves on whether Buñag would remain as chief of the Bureau of Internal Revenue.

"The BIR is an agency under the Department of Finance," he said.

"I discussed it already with Secretary Teves and he will make his own recommendations. Will there be heads that might roll because of the underperformance? We’ll find out. Let us not preempt Secretary Teves."

Ermita said Buñag had already sent him a letter explaining why the BIR’s collection target for April was not achieved.

"The large taxpayers found a lot of ways to avoid paying back taxes," he said, noting many used tax credit certificates to avoid paying up. "You know our large companies and corporations, that’s the reason why our lawyers and accountants are thriving in their businesses. Because that’s how they try to avoid full tax."

In his letter, Buñag said what "substantially contributed" to the shortfall in tax collection was the increase in the use of withholding tax credits by taxpayers to offset their tax payments and the use of tax credit certificates for their payments.

"Rest assured that all of us are exerting our best efforts in the performance of our tasks in the bureau as the primary collecting agency of the government," he said.

Buñag said the last quarter corporate tax payments made in April were lower because many companies remitted in bulk their payments in the first three quarters of 2005, and that there was also an increase in the use of minimum corporate tax payments from prior years to avoid expiration.

The data were from reports from the BIR regional offices and the Large Taxpayers’ Service, he added.

Buñag submitted to Malacañang documents showing that actual tax collections for April reached P71.36 billion compared to P63.08 billion for 2005, posting a 13-percent increase.

The target collection for April was P78.57 billion, a shortfall of P7.2 billion or nine percent.

President Arroyo has expressed disappointment with the BIR’s performance, and Malacañang said she has instructed her economic team to ensure that target collections are reached.

Malacañang also announced a pending "big cleanup" in the bureaucracy to get rid of corrupt officials and to prosecute tax cheats to bridge the budget gap.

Presidential Chief of Staff Michael Defensor said Mrs. Arroyo presided over conferences to ensure that tax collection would be pursued. — Aurea Calica, Paolo Romero

Market continues decline on weak regional markets The Philippine Star 05/25/2006

Share prices closed 0.52 percent lower yesterday, tracking overnight losses on Wall Street although last minute bargain-hunting helped cushion the fall, dealers said.

They said the recent sell-off in regional bourses suggests institutional investors are re-aligning portfolios given the prospect of rising interest rates in major global economies.

The Philippine Stock Exchange composite index fell 11.78 points to 2,252.58 after trading between 2,249.28 and 2,271.42.

Volume totaled 2.44 billion shares worth P2.68 billion.

The broader all-shares index fell 9.38 points to 1,409.98.

Losers outnumbered gainers 57 to 39, while 48 stocks were unchanged.

"The market went through a steep two-day fall, and a recovery from that drop is expected (in the coming sessions). But in the meantime, we’re still going through a consolidation phase," said Harry Liu of Summit Securities.

"The market still has to digest the recent sharp swing in prices as well as concerns over rising interest rates," said Liu.

Stocks fell for a second day in three on concerns the central bank may raise borrowing costs to support the peso. Equitable PCI Bank suffered its biggest one-day drop.

"Bond yields have been going up and perhaps they are becoming more attractive now to investors than stocks,’’ Rico Gomez, who helps manage about $1 billion at Manila-based Rizal Commercial Banking Corp., said.

Rising yields and a declining peso may "influence" the Philippines’ central bank to "eventually" raise its benchmark rates, Gomez said.

Exchange rate movements will be a factor in future policy rate decisions, central bank Governor Amando Tetangco said after the US Federal Reserve raised its benchmark rate to five percent. Concern about slowing demand for assets in riskier markets such as the Philippines dragged the peso to its lowest since January.

Higher rates may reduce the value of bonds owned by banks, brokers and insurers, and also crimp demand for mortgages and loans.

Equitable PCI, the country’s third-largest lender by assets, fell P11, or 16 percent, to P60. Chairwoman Corazon dela Paz said at a shareholder meeting after the market closed that a merger offer made by Banco de Oro in January had lapsed.

Metropolitan Bank & Trust Co., retreated P1, or 2.6 percent, to P37.50. Banco de Oro, the sixth largest, closed unchanged at P37.

Philex Mining Corp., the nation’s largest miner of gold, silver and copper, gained after metal prices recovered. Both Class A and B shares of Philex Mining rose 20 centavos, or 5.3 percent, to P3.95. Class A shares are strictly for Filipinos, while foreigners can own B shares. – AFP

Chief News Editor: Sol Jose Vanzi

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