• Improving Revenue Collection to Finance Government Expenditures*
• Working Together…Towards Better Reforms*
• Overcoming Challenges… Towards Reforms for a Better Future*
• TRANSFORMING THE BUREAU OF INTERNAL REVENUE*
• BIR: Working Towards Progress in the New Millennium*
• Attaining Global Competitiveness*
• MAJOR ACCOMPLISHMENTS OF THE BUREAU OF INTERNAL REVENUE
• E-COMMERCE AND TAX ADMINISTRATION*
• The (Near) Future of Cybertaxation in the Philippines
• E-COMMERCE: Its Implications On Tax Treaties
• Developments in the BIR Tax and Information and Education Campaign*
• THE PHILIPPINE TAX COLLECTION SYSTEM
• Tax Incentives – Necessity and Approaches*
• THE Y2K ENIGMA
• BIR ORGANIZATIONAL RESTRUCTURING

Improving Revenue Collection to Finance

Government Expenditures*

Good morning fellow revenuers and dear taxpayers!

In my first BIR anniversary speech two years ago, I said that fate seemed to have put me here as the birth of this institution coincides with my own birthday.

And as they say, birthdays – or anniversaries for the matter – are occasions for planning, dreaming, and hoping for the best. Although the past year has been particularly stressful for all of us, we can make something positive come out of this experience. By doubling our efforts and working closely together, I believe we will be able to make considerable progress in reaching our shared goals.

As today happens to be my birthday, I wish to share with you this morning three of my fondest birthday wishes – specifically those that are related to the BIR.

o       First, and naturally, is a much better collection performance;

o       Second, an intensified implementation of tax administration reform measures; and

o       Third, renewed commitment and support from all of you on these challenging endeavors.

The Bureau is tasked to collect close to 70 percent of revenues necessary to finance government’s expenditures. Higher revenue collection will allow greater fiscal space for priority spending on infrastructure development and social services such as school buildings, health centers, farm-to-market roads, and irrigation that, in turn, will enhance our country’s competitiveness and stimulate higher growth.

As of June 2007, records show that the Bureau’s cumulative collection may be better than last year’s but the growth in collection is still lower than the 9.9 percent nominal GDP growth for the first quarter. The combined shortfall of the Regions and the Large Taxpayers Service had also ballooned to about P 35 Billion, as compared to the 2006 full year shortfall of P 6.6 Billion.

However, there is reason to be hopeful. Based on preliminary reports, we had an auspicious start in the second half of the year with both the Regions and the LTS on track with the third quarter program. This positive performance should be sustained in the coming months.

An international credit rating firm has already judged that we will not hit our revenue target. Its analyst said that we are not doing anything new that will result in better revenue performance. Let us prove him wrong!

If we hit our revenue targets, improvement in our credit ratings and overall increase in business confidence should naturally follow. All these will translate to lower borrowing costs not only for the national government but for the private sector as well. This means higher investments, more jobs, and stronger economic growth.

Based on your own actions plans, there is so much we can do to improve collection performance.

Improve registration

First, we can improve registration. Under-registration of taxpayers remains high. In 2006, our population was about 87 Million with 33 Million employed persons. However, only 6.6 Million were registered and paying taxes.

Out of 26 Million unregistered employed persons, the potential number of taxpayer is huge, even if a large number is below the Income Tax threshold.

The number of VAT-registered businesses at 270,000 is similarly low if you compare it with that of other emerging economies such as Mexico, Turkey, and Chile.

Improve taxpayer database

Another area we can improve on is in our taxpayer database. There are many third party sources of information available with the DOF family that can assist the BIR in its efforts to capture more taxpayers into the tax net.

Just recently, a three-hour meeting between Insurance Commissioner Vangie Escobillo and OIC-Commissioner Lilian Hefti resulted in the discovery of P 2 Billion in possible revenue collection.

Recently, we have endorsed to the President an Executive Order that will allow the BIR and the LGUs to exchange information that will be useful to boost collection.

Use available technology-based measures

Technology is also a tool to enhance the taxpayer database. Today, we are launching two innovative programs that will assist the BIR in revenue collection.

The Revenue Watch Dashboard Project is a computerized online facility that will monitor revenue collection against targets at all levels of organization – from the National Level down to the Examiners.

The second project, the LGU Revenue Assurance Project, involves information sharing between the BIR and the Local Government Units. The program will be piloted in four municipalities, namely: Taguig, Marikina, Las Pinas and Parañaque.

The President is keenly interested in seeing the progress in these projects and will be eager for results in the next command conference.

Enhance voluntary compliance and strengthen enforcement

We are also enhancing voluntary compliance and strengthening enforcement to improve revenue performance.

The National Tax Research Center and the DOF estimates that in some areas, tax evasion ranges from P 26 Billion to P 65 Billion. Meanwhile the World Bank notes the low number of audits implies that audits are not acting as an effective deterrent against tax evasion.

To carry out more effective audit work, we would like you to pursue a national audit plan and shift to risk-based audit with emphasis on taxpayers that pose the greatest compliance risks.

Equally important is to prosecute and convict tax evaders to send a clear signal that tax evasion is a crime and appropriate punishment will be imposed for those proven guilty of this grave offense.

Provide better customer service

We should also make it easier for our taxpayers to settle their tax obligations by improving on customer service. A number of initiatives have already been implemented to this end, including electronic filing, set up of the BIR website, and establishment of the national call center.

Nonetheless, there is an urgency to consolidate, rationalize, and update BIR regulations and rulings to ensure clarity and facilitate a better understanding of our rules and procedures.

Also, we should encourage taxpayers to give us feedback or suggestions on making tax payments easier.

Address resource constraints

We recognize that the implementation of these measures require resources. We need to improve capacities of our examiners, lawyers, and staff through training. We need additional equipment that will help us do our job more efficiently.

Toward this end, we are grateful for the support from our development partners such as the World Bank, the IMF, SIDA, AUSAID, and MCA, and we look forward to further collaboration in our tax administration reform undertaking.

Lateral Attrition Law

We are also providing incentives to performers and penalizing under-achievers in our tax collection agencies with the full implementation of the Lateral Attrition Law.

Under the law, revenue collectors are entitled to incentives if their institution’s full-year target and their own regional targets are exceeded. On the other hand, penalties are imposed on under-performers that range from demotion or reassignment to dismissal. We are exercising the full power of the law in both cases. Of course, your actions must always be legally defensible and morally sound.

Our efforts to increase tax collection through these initiatives will only be successful if we can solicit greater confidence from our taxpayers by assuring them of a level playing field, and showing them that we are spending the taxes collected prudently and productively.

Starting with Reformed Value-Added Tax Law, we need to regularly report on the utilization of the additional VAT revenues for transparency and accountability as provided for under Administrative Order 141. We hope that this will translate into a virtuous cycle of greater cooperation and support from taxpayers, higher tax collection, and more revenues for priority expenditures.

We have set very challenging goals this year, virtually guaranteeing ourselves stress-filled months ahead.  Still, as American quality management expert Mary Case once said, “No intense pressure…. No diamonds.”

The BIR has great potential to become one of the most efficient tax collection agencies in the region.  If utmost effort is exerted to implement the programs mentioned this morning, then that potential can easily be realized in less than two years.

We need your continuous support and commitment to realize our shared goal of moving this nation forward. We believe that by working together – our taxpayers, our collection agencies – the BIR and Customs – and our development partners, we will not falter.

With everybody’s cooperation, we believe that we can deliver the crucial infrastructure projects to stay on the trajectory of higher growth and lift our people from poverty.

Thank you and happy anniversary to BIR!

* Speech delivered by Finance Secretary Margarito B. Teves on the occasion of the Bureau of Internal Revenue’s 103^rd anniversary celebration held on August 1, 2007 at the BIR National Office.

Working Together…Towards Better Reforms*

Secretary Teves, our honored Guests, my fellow BIR Officials and employees, good morning, and thank you for joining us at the 103rd BIR Anniversary Celebration.

In more than a century of service to the Filipino people, the Bureau has seen many a period of trial, and many a challenging situation.  I will be the first to say that the past six months have been a time of considerable challenges, to say the least, especially insofar as meeting our targets is concerned.

Be that as it may, I take heart from the words of the American author and educator, Joseph Campbell, who once said “Opportunities to find deeper powers within ourselves come when life seems most challenging.”

In this light, we in the Bureau will meet these challenges with determination and resolve, and together, will work to meet our assigned goal, endeavor to offset our shortfall, and work towards better reforms, as we move into the second semester of the year and turn another page in our history as a public service institution.

Before we speak of the future, however, it is but prudent to look back on the months that have passed, to evaluate our accomplishments, assess our strengths, and consider our challenges.  As the OIC – Commissioner, mine is therefore the honor and the duty to deliver a report on the Bureau’s performance for the First Semester of 2007.

My report shall consist of three parts. Part I shall cover the Collection Performance for the 1st semester. Part II shall provide an overview of our major accomplishments, all of which have had a major impact in our revenue collection. And last, but not the least, Part III shall focus on the Bureau’s Priority Measures for the second semester

I. First Semester Collection Performance