PNoy's BIR by: Lina P. Figueroa
The BIR is a
very important agency of our government.
Government cannot function well without funds and most of the funds that
we spend come from taxes which BIR is tasked to collect.
The taxes that
our BIR collects account for about 75% of the total national budget. Indeed, taxes are the lifeblood of our
I’m quite sure
that any new administration gives a significant thought to its choice of a
commissioner for the BIR. The criteria
have varied over the years. Some thought
a commissioner who is already part of the Bureau and who, therefore, knows the
Bureau well enough is a good choice.
Others opted for outsiders who can take on the Bureau with new and fresh
perspectives. Many who’ve had private
sector experience have also been appointed to the BIR.
We can probably
say we’ve had all these different kinds of appointees and if is difficult to
conclude what single qualification will make a good commissioner.
I’m sure PNoy
is no exception. He will carefully
choose his commissioner based on well-contemplated factors. Many are already guessing while some claim to
have trusted sources on the information.
I’ll probably not bother to join the speculation and just wait for the
announcement. Anyway, whether the current
commissioner is retained or a new one is appointed, the real test will come
later when the BIR’s performance as an institution is evaluated.
commissioner should make the collections happen. The commissioner should be able to bring in
He is not even
allowed a grace period for his performance.
Because while he is going through his own adjustments to the new post
and learning the routes, money is already being spent by all other agencies of
government. These collection statistics have
spelled the decision to retain or replace the commissioner. In a number of cases, the commissioners
themselves have voluntarily resigned if they feel that they have not
accomplished their revenue-raising responsibility well enough.
considering PNoy’s pronouncements that he will not support new taxes, the task
of PNoy’s BIR and its commissioner becomes even more difficult. Without new taxes or increases in existing
tax rates, increased tax collection can only come from more efficient tax administration
and more compliant taxpayers.
issue has already dealt with the first part of the equation, on developing
enabled and motivated BIR personnel.
is an equally complex equation. Various
studies have already been conducted on tax compliance and many factors have
Foremost is the
risk factor – the risk of being caught and the risk of being penalized. The
higher the risk of being detected and the heavier the penalties, the more
taxpayers will choose to comply. Taxpayers
also put significant value to equity or fairness – both in terms of the
benefits returned by government on taxes paid and in terms of the relative
burden of the taxpayer compared to other taxpayers, whether in the same or
different industry and income status. Honest
and compliant taxpayers should not perceive that they are further penalized for
choosing to comply. Rewards for honest
and compliance taxpayers may even be worth considering. Programs such as least priority in audit have
proven to be encouraging in the past.
Honest taxpayers would also appreciate that their rights are respected
in their dealings with the tax bureau.
compliance in terms of the number of compliance requirements and clarity in the
tax rules and obligations also affect compliance. A lot of times, taxpayers who actually
intend to comply, fail to comply properly and are penalized because the rules
that are supposed to be followed are ambiguous.
In extreme cases, the rules seem to be too idealistic and in practice,
difficult if not almost impossible to follow completely. Compliance cost becomes burdensome if
taxpayers are highly regulated.
have high hopes that if revenues can be raised efficiently, and if funds can be
expensed properly, BIR can support a reduction in tax rates, particularly in
personal income taxes for certain income levels. We would like to see the 32% rate imposed only
on individuals who really have income in excess of the amount required to live
decent lives and support children to become productive assets of the country in
the future. In that way, government can
truly be a partner, not a competitor, in improving the Filipinos’ lives.
This article is not intended to be a substitute for professional advice. For comments and inquiries, you may e-mail the author at Lina.Figueroa@ph.gt.com. For other tax concerns, please check out our other tax services.