BIZ OPINION: NARROWING THE BUDGET DEFICIT
MANILA, JUNE 18, 2007 (STAR) BIZLINKS By Rey Gamboa - Rumors continue to fly about the precarious tenure of Jose Mario “Jojo” Buñag as chief of the Bureau of Internal Revenue. The many who are coveting for his job resort to various means to project supposedly mounting pressure to relieve Jojo from his position.
Some media personalities are even being cited, maliciously in some cases, as instruments for this dirty job.
I saw Commissioner Buñag during the concert featuring Chad and Jeremy and the Association, and he was relaxed and cheerful with his friends apparently unmindful of these ugly talks. He exudes with confidence that he is doing his best in bringing in the much-needed money that finances the cost of running this government. Meantime, rumor mongers shall continue to target not only Jojo but also Customs Commissioner Napoleon Morales.
Tough BIR and BOC targets
Both BIR and BOC share the brunt of raising revenues to cover a large chunk of the expenses that the bureaucracy incurs – loans and interest payments, salaries for government employees, and, oh yes, for the much-sought after “pork barrel” for our senators and congressmen. No wonder then that many keep a tight watch on their performance.
From January to March this year, the BIR chalked up a P12.1-billion shortfall; Customs, on the other hand, failed to meet its target by P6.7 billion. Because of the two agencies’ inability to deliver on commitments, the government fell short of closing in on its budget deficit.
Which is why when during the first quarter of the year both the BIR and Customs missed their collection targets, talks that heads would roll started to surface again. Another opportunity for those who want Buñag and Morales out.
Achievements despite odds
It would seem unfair to unconditionally blame the BIR and Customs – even their chiefs – on the failure to deliver on set collection targets. In fairness, both Jojo Buñag and Napoleon Morales are known to be hard-working individuals committed to bringing their respective agencies to professional standards of performance.
Last year, despite lower-than-forecast interest and inflation rates, BIR under Buñag’s leadership achieved a 20-percent growth in collections, equivalent to more than P100 billion, compared to the previous year. In terms of set targets, the team exceeded collections by P30 billion.
This year, however, it seems that the targets, which are set by the Department of Finance, are more than challenging. In the first quarter of the year, for example, the DOF assumed a GDP growth rate of 10.2 percent, an inflation rate of 3.3 percent, and an interest rate (based on a weighted 91-day Treasury bill) of 5.1 percent.
Actual results were much lower: GDP growth was only 9.86 percent, inflation was only 2.9 percent, and the T-bill interest rate was just at 3.64 percent. A lower-than-projected GDP growth means there had been lower business activities, and logically, would translate to lower taxes – and collections.
The same is true with inflation rate and lower interest rate. While lower-than-projected inflation and interest rates are good for business and the economy, they can ruin the tax collection targets of the BIR.
The extended 12-percent VAT, for instance, is based on the prices of goods and service. A lower than projected inflation rate therefore means that the BIR cannot collect e-VAT on the “higher” (or inflationary) prices assumed in the DOF-set target. At the same time, lower than projected T-bill interest rates mean that the BIR collects less tax on the interest income of the banks and other financial institution that invest in T-bills.
Customs, on the other hand, suffered the lower value of imports as a result of the stronger peso. This was compounded by the lower crude oil and oil product imports, which by sheer volume and value, constitutes an important indicator in the Custom’s target setting.
Heck, even the Bureau of the Treasury, which collects dividends of the national government from state-owned corporations, turned in only P14.1 billion, P1.1 billion short of its P15.2-billion target. Targets are targets
Nevertheless, targets are targets, and as good soldiers, the whole Finance bureaucracy is doggedly committed to continue finding ways of delivering on their objectives. In the BIR, for example, Buñag says that innovative administrative and procedural reforms continue to be introduced.
The updating of the registration data base carries on with stronger conviction. The move to integrate the tax system, which includes the computerization of operations of revenue district offices, has already started. Audit manuals for the banking, insurance, telecommunications and other industries have likewise been initiated.
The BIR has also begun using computer-assisted audit techniques as well as introducing the use of bench marking and profiling methods on a more extensive scale. Finally, the BIR’s account receivables are now computerized.
It helps that a number of international agencies like the Millenium Challenge Account, the World Bank, IMF, SIDA, AusAid and JICA are all helping out.
BIR and Customs are still optimistic that they will meet their full-year targets, albeit with some necessary tweaking in the goals set by the DOF for the next two quarters of the year.
No new taxes please
To pare down the budget shortfall, some Arroyo bright boys are reportedly talking about new taxes to be imposed, one of them venturing to suggest a tax on the millions of Filipinos working overseas.
Fortunately, this seems to be losing flavor especially after the World Bank just recently issued a stern reminder that plugging tax leaks, not imposing new taxes, must be the preferred solution to pursue.
Notwithstanding continuing pressures from those who expect to benefit from changes in the BIR and BOC leadership, Commissioners Buñag and Morales must instead push for stricter implementation of the various tax reform initiatives and continue what they are doing right and resist fingerpointing and faultfinding..
Poker Tournament for Charity
Poker tournament for fund raising is fast gaining popularity. Soon it will be at par with golf tournaments with the added benefit of being less costly to conduct. Ernest Villareal, an active participant and sometimes organizer of golf tournaments, and his friends from the Philippine Military Academy Makatarungan Class of 1978 are holding a “Texas Hold’Em” charity poker tournament on June 23 at the Le Salon Ballroom Hyatt Casino Hotel Manila.
Entitled Battle Royale, it promises to be a fun filled and challenging event among poker game enthusiasts for a charitable cause. At stake are cash prizes starting from P10,000.00 for each table winner during the shoot-out round and up to P100,000.00 for the final freeze out round winners.
PAGCOR is sweetening the prize pool with an additional P10,000.00 worth of non-cashable playing chips that will be awarded to the lucky seven players in the final freeze out round. Each game ticket of P5,000.00 provides a player with the same starting value of chips. The net proceeds of this fund raiser pays for the tuition of orphaned children of departed classmates and various socio-civic programs that the class undertakes around the country. Call 8864121 and look for Evelyn for advanced ticket purchases. Tickets will also be available at the registration table on event day.
Chief News Editor: Sol Jose Vanzi
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