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Under
the Attrition Act of 2005 (Republic Act 9335), the two
major revenue-raising agencies of the national
government are effectively governed by a system of
reward and punishment based on their collection
performance.
Thus,
never before have the Bureau of Internal Revenue (BIR)
and the Bureau of Customs (BOC) been under so much
pressure to deliver what is expected of them based on
their respective mandates. The attrition law was
designed precisely to greatly minimize, if not totally
eradicate, the corruption that had become endemic in
these agencies.
Under
the new system, these agencies must now pull their
respective loads, or else. The framers of that law
simply wanted to ensure that the BIR and the BOC would
be working more in sync with, instead of perennially
frustrating, the national government’s fiscal goals.
Under
the new system, the agency that exceeds its collection
target will be generously rewarded. Officials and
employees would get 10 percent of the surplus revenues
in bonuses. The bonuses would be distributed in
proportion to each one’s relative contribution to the
bureau’s success. This was demonstrated only recently
when the BOC got entitled to a bonanza of more than P500
million. The BOC had exceeded its 2006 target by more
than P2 billion.
Should
the BIR or the BOC, however, unjustifiably fall short of
their collection goal by 7.5 percent or more, the
officials and employees would be penalized accordingly.
The officials and employees could either get transferred
or fired outright, depending on each one’s “share” in
his bureau’s collection debacle.
If this
yardstick were to be strictly applied henceforth (now
that the Supreme Court has upheld the constitutionality
of RA 9335), I’m afraid Commissioner Lilian Hefti would
be among the first to go.
The
Department of Finance (DOF) came out with the good and
bad news only recently. The good news is the national
government’s deficit did not exceed P15.4 billion
despite the big surge in spending occasioned by the food
and fuel crises. The bad news is that nearly half of the
national deficit was caused by the BIR’s huge collection
shortfall of P7.1 billion for the first seven months of
the year.
The
BIR’s collection for the period amounted to only P63.4
billion. Its target was P70.5 billion, which had been
set by the budget department.
By the
Attrition Act’s yardstick, the BIR’s collection
shortfall was equivalent to 10 percent, or 2.5
percentage points beyond the cutoff point of 7.5
percent. Such a huge collection deficit, a DOF official
says, makes Hefti “absolutely attritable.”
“Attritable,” meaning “expendable,” is a term freely
used at the DOF where it was obviously coined as the
attrition law became in vogue. It is apparently the
DOF’s official term for the nonperformers who deserve to
be sent to the slaughterhouse.
(In
contrast, the BOC collected P25 billion, or P2 billion
more than the target set for it, although P3 billion of
the total chalked up was really the “tax expenditure
subsidy from the National Food Authority.” Strictly
speaking, no hard cash came in, only “credits” reckoned
in peso terms because of all the foreign rice brought in
by the grains agency.)
Come to
think of it, the BIR has lately been getting a lot of
flak for its lackluster or disappointing performance
under Commissioner Hefti.
Only
last week, business columnist Roberto Romulo chided the
agency’s Deputy Commissioner Gregorio Cabantac, who is
in charge of the international tax affairs division, for
his inaction on tax exemptions to which many
multinationals are entitled under the government’s
foreign investments policy. Romulo called Cabantac
“Commissioner Catambak” because of the latter’s penchant
for piling up and giving no importance to legitimate
requests for tax exemption.
Hefti
assumed office in July last year (or more than 14 months
ago) amid high expectations that a career official like
her “was just what the doctor ordered” to cure the BIR
of its chronic malaise of corruption and inefficiency.
As it
turned out, however, Hefti’s reticent nature has only
worked against her. She would rather send any of her
deputies to deal with large taxpayers than face them
herself. This is probably why she is not getting any
spectacular results in this crucial area—the big
taxpayers.
This
reticence, I heard, may yet deal the death blow on her
entire career. A congressman recounts that a contingent
of congressmen were at Malacañang recently to consult
with President Arroyo on certain revenue issues. To
settle such issues with dispatch, she sent for Hefti.
But Hefti was too shy for that sort of thing. She sent,
in her stead, a deputy commissioner. Gloria Macapagal-Arroyo,
of course, was furious.
I think
that with that gaffe, which no official in the Executive
branch would dare commit, Hefti’s days as BIR
commissioner are numbered.
Now we
know why she is “absolutely attritable.”
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