For the "A"-quino Team, there should be no Plan B
For the "A"-quino Team, there should be no Plan B by: Rolando T. Devesa
Is it just wishful thinking or can P-Noy’s Plan A really do
the trick in achieving the acceptable level of tax collection efficiency? While the key officials of the Department of
Finance in the Arroyo administration, along
with some U.P. economists, are convinced that raising the EVAT rate from 12% to
15% is the Plan B that P-Noy should have,
it seems that P-Noy would not give up on
his campaign promise not to raise EVAT rate, without a fight.
Rightly so. For even
if P-Noy ends up raising the EVAT rate, Pinoys may be more forgiving to him if they see that P-Noy fought hard stop
the EVAT-increase trap. And, what a
fight will that be.
Definitely, the only way to
stop the EVAT-increase trap is to improve the country’s tax collection efforts. As we have heard only of the general
objectives of Plan A, that is, of plugging the leakages in the tax system and
curbing graft and corruption, many are wondering about the specifics of
P-Noy’s Plan A.
What would make P-Noy’s Plan A
If Plan A is to succeed, it
must have more than what GMA has put into her administrations’ tax collection
efforts (except for the EVAT increase, of course). GMA appointed very competent and technically
good BIR commissioners, and she pushed for the passage of the Attrition Law to
motivate tax collection agencies. GMA
even held regular command conferences with key BIR officials. Notwithstanding
all these, there has been no marked and consistent improvement in our tax
What should be the focus of
Preventing corruption before it
happens is closer to raising tax collection efficiency than going after tax
evaders. Besides, landing a big fish in jail may take years of legal maneuvering. Also, the equation for successful tax evasion
is usually this, cooperative government
tax agent + corrupt taxpayer = Evidence of tax evasion becomes harder to
find. Take away a cooperative BIR
examiner from the equation, and the battle against corruption is already half
Thus, Plan A must focus on the government agency
tasked to collect more than half of the country’s taxes, the Bureau of Internal
Revenue. This focus should not end with the appointment
of an honest and capable BIR commissioner.
Institutional reforms within the BIR is equally important, if not more
Plan A must start with the
premise that the BIR has long been neglected by the National Government, both
in terms of resources and capacity-building.
First, the BIR, as an institution, must be able to attract, develop,
and retain highly competent BIR examiners. Second,
the BIR, as an institution, must be able to resist the influences of those who
can prevent it from an impartial and fair collection of taxes.
For Plan A to achieve these
institutional reforms, it must consider
removing the BIR from the clutches of the Salary Standardization Law. We have exempted the Bangko Sentral ng
Pilipinas and some GOCCs from the Salary Standardization Law, the BIR deserves
to be on the same plane. Plan A must
accept the fact that tax collection efficiency will not come with the
appointment of one good and competent BIR commissioner. It is now time to attract the best and the
brightest Pinoys into the tax collection pursuits of P-Noy.
Once the BIR is manned by the
best and the brightest Pinoys, Plan A must ensure that these people will be
able to do their jobs without interference from meddling people with vested
interests. The more powerful of these meddling people are the politicians who are into business, and
businessmen with politicians backing them.
Plan A must assist the BIR, institution-wise, to contend with these meddling
The BIR, as an institution,
must cease to be perceived as being used by those in power to favor those who
are on their side of the fence, and keep at bay those who are on the opposite
So, how would Plan A achieve
Plan A cannot hope to
accomplish institutional reforms within the BIR without a legislative
agenda. A law must be passed to have the
BIR exempted from the Salary Standardization Law. Giving a degree of independence to the BIR to
enforce tax laws without fear nor favor may require institutional changes that
can only be done through the enactment of a law. Plan A must work into place a landmark piece
of legislation that will overhaul the BIR as an institution, and make it fit to
allow P-Noy to escape the EVAT-increase trap.
What is the timeframe for Plan
Compared to raising the EVAT
rate under Plan B, the benefits of institutional reforms under Plan A may not
be felt immediately, thus, the sooner we
get these institutional reforms in
place, the better it is for P-Noy’s Plan A. Unless the legislative agenda on Plan A is certified by P-Noy as urgent, the
EVAT-increase trap might catch up on P-Noy.
The EVAT-increase trap is real, and all roads will lead to it, unless
P-Noy’s Plan A succeeds. And, don’t we all want it to succeed?
This article is not intended to be a substitute for professional advice. For comments and inquiries, you may e-mail the author at Rolando.Devesa@ph.gt.com. For other tax concerns, please check out our other tax services.