ACTING BIR COMMISSIONER JOEL TAN-TORRES AND THE 5% CAMPAIGN TAX
MANILA, NOVEMBER 4, 2009 (STAR) By Iris Gonzales - The country’s new revenue chief vowed yesterday to strictly implement the controversial five percent tax on campaign spending.
“We intend to put in new measures in the withholding tax system, starting with the five percent tax on campaign spending,” acting Bureau of Internal Revenue (BIR) Commissioner Joel Tan-Torres said.
Some quarters have expressed fears that the campaign tax may be used by the administration to harass opposition supporters.
Tan-Torres’ predecessor Sixto Esquivias IV resigned reportedly for health reasons almost exactly a year after assuming office.
President Arroyo has yet to officially announce a replacement for Esquivias.
He resigned three days after skipping work last week reportedly due to high blood pressure caused by intense stress over the large shortfall in tax collection.
On his first day as BIR officer-in-charge, Tan-Torres also said one of the tax enhancement measures that he hopes to initiate is the tighter monitoring of the income of retailers in bazaars this Christmas.
“We will put up a tax monitoring system for bazaars and retail stores for the Christmas shopping season,” he said. “We will start plugging loopholes of forthcoming and existing tax incentives that dilute revenue generation.”
Revenue Regulation 8-09 requires all political candidates, political parties and contributors to register with the BIR as withholding agents.
The BIR, the government’s main revenue earner, said it has been missing its collection targets because of the global financial crisis which has dampened economic activities.
From January to September this year, the BIR collected only P557 billion, or P39.2 billion short of the target for the period.
In September alone, the BIR collected P56.2 billion, just slightly higher than the P55.8 billion it had raised in the same period last year.
Tan-Torres hopes the new measures would allow the BIR to achieve its full-year target of P798.5 billion but he conceded that this would be difficult.
Weak revenues have widened the government’s deficit to P237.5 billion as of end-September, just P12.5 billion short of the full-year ceiling of P250 billion.
Lines drawn
Tan-Torres also said the task of Presidential Adviser on Revenue Enhancement (PARE) Narciso Santiago Jr. will be limited to oversight and providing policy direction to BIR’s Large Taxpayers Service.
“I’m aware that the involvement of PARE will be limited to essentially oversight function and providing policy direction,” he said.
He stressed that the LTS unit would not be turned over to PARE.
Insiders said Santiago and Esquivias were at loggerheads over the LTS unit.
Santiago is the husband of Sen. Miriam Santiago.
Undersecretary Santiago had reportedly asked Malacañang for the transfer of the LTS unit to his PARE office but this was opposed by Esquivias.
At a Senate budget hearing early last month, Sen. Santiago slammed Esquivias for reportedly failing to heed President Arroyo’s Administrative Order 236 placing the LTS under the direct jurisdiction of Narciso.
“What is your problem Mr. BIR commissioner?! What is your interest in the large taxpayers unit?!” Santiago angrily asked Esquivias during the hearing.
“You’re so possessive of the large taxpayers unit. Are you going to use it for your campaign?” Santiago sarcastically asked.
The LTS includes the Top 1,000 corporations in the country or those with a net worth of P300 million and pay an annual income tax and withholding tax of at least P1 million.
They also pay value added tax of at least P100,000 for any quarter. Taxpayers in this group include blue-chip firms and big businesses.
Commendable
Malacañang commended Esquivias for taking responsibility for the poor performance of the BIR.
Deputy presidential spokesperson Gary Olivar said that he was not sure about the reason behind Esquivias’ resignation but based on the reports quoting him on the poor performance of the BIR, his gesture was “certainly praiseworthy.”
“We don’t know all of the facts behind what’s happening at the BIR, what its performance is and also his medical condition, so I hesitate to make a judgment in his case personally. But certainly the principle of taking accountability for your own performance especially if you are the head of an agency, that is always commendable,” Olivar said.
Press Secretary Cerge Remonde, quoting Esquivias’ immediate boss at the BIR, Finance Secretary Margarito Teves, said that the Commissioner resigned because of poor health.
Olivar argued that the stress could have taken its toll on Esquivias health and forced him to eventually quit.
“It is certainly a comment on the difficulty of what he’s trying to do,” Olivar said.
Olivar also said that it was understandable for Esquivias to resign based on the principle of command responsibility.
“Nobody can quarrel with that principle that you should take personal accountability for how you perform,” he said.
“But what’s important, the bottomline is that if you fail to do what you are expected to do, this is probably a problem that you have to account for. That is the principle of Commissioner Esquivias and the principle itself is commendable,” he added.
In a statement, Teves expressed his gratitude to Esquivias for his “dedicated and earnest service to the government and to the country.”
Teves said that with “due deference to the appointing authority” Esquivias was “giving way to other individuals who would hopefully lead (the BIR) to achieve even better results.”
‘Reasonable’ thing to do
Former budget secretary Benjamin Diokno said Esquivias’ decision to quit was the “most reasonable thing to do” even as he urged President Arroyo to replace him with “somebody who understands the system.”
“It’s good that there are still people like him in the government… I think he will soon be fired as penalty for not meeting the target,” Diokno told reporters after attending a media forum in Intramuros, Manila.
“As early as last year I know that the target could not be attained,” Diokno said referring to BIR’s collection target.
“I think it should be lowered realistically… right now actually their collection was five percent lower than last year,” Diokno, who is also a professor at the University of the Philippines’ School of Economics, said.
He said the economy slowed down significantly due to the two recent typhoons that affected the corporate and personal income of Filipinos mostly in the National Capital Region and Luzon.
He said these regions comprise 66 percent of the total gross domestic product.
Me resign? No way
But for the chief of the Bureau of Customs, another underperforming revenue agency, the resignation of Esquivias has provided no compelling reason for him to resign.
Customs Commissioner Napoleon Morales said the BOC is unlikely to meet its P277 billion collection target for the year due to the lingering global economic crisis.
“To reach the yearend target is already improbable at this point. But what we can do and will do is maximize collections and ensure that there are no leaks in revenue,” Morales said in a statement.
The BOC earlier announced its collection shortfall of P36.02 billion.
“I have a job to do and I will do my best until the President tells me otherwise, at which time I will graciously hand over the reins to my successor,” Morales said.
Fiscal crisis unfolds
Meanwhile, the militant Bagong Alyansang Makabayan said Esquivias’ resignation demonstrated the seriousness of the fiscal crisis.
“The problem with tax collection is more systemic than anything else. However, there appears to be some pressure on Esquivias especially now that the national government is set to exceed its budget deficit target,” Renato Reyes Jr., secretary-general of Bayan, said.
“The pressure (on Esquivias) is likely intense because of the looming P308-billion budget deficit. The people in the BIR are in the unenviable position of collecting taxes to meet the ever growing and often unjustified expenditures of the Arroyo government,” Reyes noted.
“It is also lamentable that when there is a shortfall in collections and a fiscal crisis ensues, cutbacks on social services occur,” he added. – With Katherine Adraneda, Helen Flores, Marvin Sy
GMA accepts BIR chief's resignation (The Philippine Star) Updated November 03, 2009 12:00 AM
MANILA, Philippines - President Arroyo has accepted the resignation of Bureau of Internal Revenue (BIR) chief Sixto Esquivias IV.
Quoting Finance Secretary Margarito Teves, Press Secretary Cerge Remonde said Esquivias quit for health reasons.
Remonde said Esquivias’ replacement would be announced today.
However, Executive Secretary Eduardo Ermita said the former BIR chief admitted that he did not perform well.
Ermita maintained that the President should now be given the chance to make changes as she sees it best.
Speculations had been going early on that the poor tax collection effort of the BIR and other reasons were working against Esquivias.
In the first nine months of this year, the BIR has fallen short of its revenue collection target by P39.2 billion.
Senior deputy commissioner Joel Tan-Torres said the bureau would most likely miss its full-year collection target of P798.5 billion because of the recent storms that hit the country.
Aside from his failure to meet revenue targets, Esquivias was also criticized for supposedly not turning over the Large Taxpayer’s Unit of the BIR to the Presidential Adviser on Revenue Enhancement (PARE) Narciso Santiago Jr., husband of President Arroyo’s ally Sen. Miriam Defensor-Santiago.
Earlier this year, the President expanded PARE’s powers to include the investigation of cases in the Large Taxpayer’s Unit and initiate the filing of charges against violators of tax laws.
This move was opposed by the private sector, particularly the Tax Management Association of the Philippines, Financial Executives Institute of the Philippines, Philippine Chamber of Commerce and Industry, and Philippines Institute of Certified Public Accountants.
The organizations said the issuance would expose large taxpayers to double investigation and that the power given to the PARE would be a “mere redundancy” that can “disrupt a business enterprise’s operations” and hurt its “bottom line.”
Esquivias took over the BIR on Nov. 3, 2008.
He replaced Lilian Hefti who quit in October last year also because of health reasons.
A taxation lawyer and a taxation professor at the University of the Philippines Diliman campus, Esquivias was with the BIR for 23 years until he resigned in 2000.
He rose from the ranks, starting as an examiner to his last position as deputy commissioner. He is a graduate of the Ateneo Law School.
He also served as consultant to Sen. Juan Ponce Enrile and former senator Ralph Recto on various tax issues.
Torres to take over
Tan-Torres is expected to head the bureau until Mrs. Arroyo names a new BIR chief.
“I have to wait for formal instructions on that,” said Tan-Torres, a former partner at the Sycip Gorres & Velayo auditing firm.
He said that in the absence of a new BIR chief, it’s going to be “business as usual” at the agency.
Executive Order 827, issued by Arroyo last Aug. 14, created the position of senior deputy commissioner.
The EO states that the senior deputy commissioner would head the agency in the absence of the commissioner.
His other duties include conducting regular assessments of the public’s perception of the BIR activities, formation of a Tax Academy or Training Institute, conducting enforcement activities directed on major transactions that have significant tax potential and initiating practical internationally accepted tax administration trends and practices.
Esquivias maintained his silence on the issue, surprising even ranking officials at the agency including his deputies.
“I will wait for him to convene the mancom (management committee) to announce his decision,” said BIR deputy commissioner Nelson Aspe.
An BIR insider said Esquivias had been absent for three days because of high blood pressure.
“There are human limitations. It was probably because of the pressure,” said the BIR source.
The BIR has not been meeting its revenue goals reportedly because of weak economic activities and rampant corruption in the agency.
From January to September this year, the BIR collected P557 billion, short by P39.2 billion of its target for the nine-month period.
In September alone, the BIR collected P56.2 billion, just slightly higher than the P55.8 billion in the same period last year.
For the whole year, the BIR is tasked to collect P798.5 billion but officials said it would be impossible for the agency to meet this as businesses damaged by typhoons “Ondoy” and “Pepeng” have been seeking tax deductions. – With Iris Gonzales
Chief News Editor: Sol Jose Vanzi
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