Well, at least Malacañang can’t say that the good news doesn’t get disseminated enough.
Last week I received in my e-mail a packet of “good news” from the Office of the Presidential Spokesman. Among the harvest of “good news” is that the Bureau of Internal Revenue (BIR) has posted a 14.3-percent year-on-year growth in tax collections as it reached a total of P302.94 billion from January to April this year.
This figure exceeds the cumulative target for the period, which amounts to P302.16 billion, by P781 million, or 0.3 percent. Compared with actual tax collections by the BIR for the same period in 2010, where the tax collection was P265.05 billion, this year’s revenues surpassed 2010 by P37.89 billion, resulting in 14.3-percent growth.
“I think, through hard work, commitment and dedication to perform, my people at the BIR continue to prove that the agency can meet the government’s revenue expectations. We must continue to increase the BIR’s performance through reforms,” Commissioner Kim Henares said. But as the presidential spokesman himself has pointed out, columnists must check their facts before they make any comment.
What I’ve found in my research doesn’t quite match what the BIR says. The current administration’s tax effort is actually way below expectations, although it shows an upward trajectory.
Last year tax collection rose by less than 1 percent, or from 11 percent in the first half under Arroyo, to 11.7 percent in the second half under President Aquino. But former Socioeconomic Planning secretary Cielito Habito says adding the tax and nontax revenues together shows that tax growth has actually slowed down to 6.6 percent as compared with 8.5 percent in the previous administration.
Worse, when he pegged it to the growth of gross domestic product (GDP), the former National Economic and Development Authority director general said he found that tax efforts slowed down to 12.4 percent in the second semester of 2010, from 13.4 percent in the first half under the Arroyo administration.
This, says Habito, only means that there is nothing spectacular in the current tax-collection campaign, as revenue earnings did not quite catch up with economic expansion. In fact, the latest figures for the first two months of 2011 show that tax-revenue growth has turned sluggish at 10.1 percent.
Thus, we should not be surprised at all that Malacañang officials and pro-Aquino legislators in Congress have been emphasizing the need for new taxes by 2011 as a way to plug the burgeoning deficit.
The most recent pronouncement came from Lacierda, who stressed that Mr. Aquino’s “no-taxes” pledge during the 2010 campaign period applied only to this year and not for the entire six-year period of the administration.
Well, that’s the fine print in the President’s campaign platform that few bothered to scrutinize, and by next year we shall all find the taxman trying to turn everyone’s pockets inside out to boost government coffers.
The imposition of new taxes, Habito says, puts an additional burden on obedient taxpayers instead of compelling delinquent ones to pay the right amount of taxes. It’s also a big political gamble for lawmakers up for reelection in 2013. As former Budget secretary Benjamin Diokno correctly observed, politicians would be wary about approving new taxes next year, with the 2013 midterm polls only less than 12 months away. Voters do not forget politicians responsible for burdening them with more taxes.
Based on media reports, the government appears to be banking on seven bills in Congress seeking to increase excise taxes on sin products, such as tobacco and alcohol, by either putting in place a unitary tax system or indexing the tax rate to inflation.
But if the President wants to increase revenue collections without implementing new taxes, perhaps it ought to consider the proposal to adopt a foolproof strip-stamp system now being used in Brazil, Turkey and California to combat smuggling and compel tobacco and alcohol companies to pay the right amount of taxes.
It is said that after California adopted the strip-stamp system, it increased tax collections by about $110 million and tax-evasion cases declined by 37 percent from $292 million to $182 million in 2008.
In Brazil the system developed by a Swiss firm, Sicpa Security Solutions, was able to generate additional revenues for the government of $100 million in 2008 alone.
And of late, contrary to reports that it has thrown out this technology, the southeastern European country of Albania has actually become the latest convert to the strip-stamp system.
By a unanimous vote of 73-0, the Albanian parliament rejected a decree issued by President Bamir Topi blocking the implementation of an excise-tax system featuring the strip-stamp technology to monitor the excise-tax payments of cigars and cigarettes entering their country.
The Parliament said President Topi’s arguments against the bill fine-tuning the implementation of the excise-tax law on tobacco and alcohol products were “not clear, convincing and exhaustive.”
This new fiscal-stamp system, which uses Sicpa’s technology that has long been offered in the Philippines to raise more than P100 billion over a seven-year period, will apply to all tobacco products, beers and fermented and distilled liquors, whether imported or produced in Albania.
Under this law, fiscal stamps with sophisticated security features will now be placed on all tobacco and alcohol products sold in that country to protect against counterfeiting.
Albania’s Ministry of Finance has inked a 10-year concession agreement with Sicpa to provide the services, controls and technology needed to implement the fiscal-stamp system.
At the very least, the proposal to adopt the same technology here should be given a fair hearing by our legislators and policymakers.
Domestic inertia
The New York-based think tank Global Source has tempered its growth outlook for the Philippine GDP this year to 4.8 percent from 5.3 percent, citing high commodity prices and “domestic inertia.”
“Domestic inertia” isn’t a flattering description of what’s going on under the Aquino administration. And Malacañang’s complaint that the “good news” doesn’t get disseminated enough is accurate, as it hasn’t obviously reached New York. That holds dark prospects for getting more foreign investments for vital infrastructure projects under the Public-Private Partnership Program, although Global Source expressed confidence in the resilience of remittances and of services exports, specifically business-process outsourcing.
Nevertheless, this should be a wake-up call for the nearly one-year-old Aquino administration to get moving. After all, the opposite of inertia is movement, and we mean movement in the right direction, not backward.
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