BIR mulls scrapping of collection targets

Focus on taxpayer satisfaction, service efficiency

MANILA, Philippines - Government revenue collection targets may be dropped in favor of quality gauges that measure taxpayer satisfaction and efficiency in service delivery, the Bureau of Internal Revenue (BIR) said yesterday.

“This is being studied. Top management are thinking and studying other ways of measuring performance,” BIR assistant commissioner Marissa Cabreros said in a text message.

“(This could include) taxpayer satisfaction, effectiveness and efficiency of frontline service delivery and ease of doing business with the BIR,” she said.

BIR, which accounts for around 80 percent of tax revenues, raised P157.29 billion in November, up 15.34 percent year-on-year, the Department of Finance (DOF) reported over the weekend.

The DOF, which oversees BIR, however did not release data on how the agency performed against monthly target, merely saying that “we don’t do targets anymore” as per orders of Finance Secretary Carlos Dominguez.

Finance officials did not reply to request for further comment, but Cabreros said the proposal is still under study.

“I have no information (yet) as to the timeline (of implementation)... It’s still being studied as there are many things to consider,” she said.

One consideration is the implementation of Republic Act 9335 or the Lateral Attrition Law, which rewards or penalizes revenue officials according to their capacity to meet targets.

Last September, House Speaker Pantaleon Alvarez said Congress would activate the law’s oversight committee to examine how BIR and the Bureau of Customs performed.

Both agencies account for around 90 percent of state revenues and have seldom met collection targets in previous years.

According to the medium-term plan, BIR is tasked to collect P1.62 trillion and Customs P409 billion this year.

Sought for comment, Benedict Tugonon, president of industry group Tax Management Association of the Philippines, welcomed the plan.

“It’s high time to do away with the collection-based matrix and avoid forcing taxpayers to pay deficiency assessments as the only way to terminate tax audits,” he said in a text message.

But Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said the plan is quite unclear since revenue projections are needed in budgeting expenses.

“There should at least be an implied collection target. How do you track your deficit if you don’t have one? What are the steps that you will take if you are aiming for a particular tax effort?” Neri said in a phone interview.

Upon taking over in June 30, the Duterte administration lowered revenue targets while widening the budget deficit cap this year to 2.7 percent of gross domestic product and three percent from 2017 to 2019.

Tax effort – which measures how much taxes are raised as the economy expands – is targeted at 14.1 percent this year before rising to as much as 16.3 percent in 2019.

In lowering this year’s targets, Dominguez had said the original goals were too high and unrealistic. Neri agreed, but said not having collection goals is different altogether.

“At least with goals you get to have a feel whether you are deviating significantly or only slightly from your objective. It’s like a compass. it should provide you a guide toward a certain target,” he said.