The Bureaus of Internal Revenue (BIR) and of Customs (BOC) are currently pursuing reforms in tax administration, including the use of an Internal Revenue Stamps Integrated System (IRSIS) for both cigarettes and alcohol products, to plug leakages and increase revenue collections, according to the Department of Finance (DOF).
DOF Secretary Carlos Dominguez III said reforms such as the IRSIS will complement the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) or House Bill No. 5636, which the Duterte administration is urging the Congress to pass swiftly in order to provide the government a steady revenue flow that will help fund its inclusive growth agenda of cutting poverty incidence to 14 percent by 2022 and transforming the country into a high-middle income economy by that time.
In Tuesday’s hearing by the House ways and means committee chaired by Rep. Dakila Carlo Cua, Dominguez also took the opportunity to thank the members of the House of Representatives for their overwhelming support for TRAIN, which this chamber passed by a 246-9 vote last May 31.
Cua was the principal author of the Department of Finance (DOF)-endorsed HB 4774, the original version of TRAIN that was consolidated with 54 other related measures into HB 5636.
Dominguez said that on top of tax policy reforms such as the TRAIN bill, the executive branch is implementing on its end improvements in tax administration “to optimize revenue collections and plug the leakages in the system that have cost our government tens of billions of pesos in foregone revenues each year.”
At the start of the hearing, Deputy Speaker Romero Quimbo commended Dominguez for taking time out “from his hectic schedule” to attend the hearings of the committee.
“I just want to put on record that the Secretary has always been coming over to the House of Representatives, recognizing the process here. We really appreciate your presence and for as well recognizing it [despite] the hectic schedule you have,” Quimbo said.
Cua said he “share[s] the same sentiment,” and also thanked Dominguez for his presence at the hearing.
These improvements include the affixing of Internal Revenue Stamps on imported and locally manufactured cigarettes and the implementation of IRSIS to curb smuggling in the cigarette industry.
But following the implementation of IRSIS, the government noticed the emergence of fake stamps and took steps to stop its proliferation.
Among the steps taken by the government are the planned revisions to the stamp design and the installation of closed circuit CCTV monitoring systems by cigarette manufacturers inside their factories and warehouses so that BIR personnel could monitor their operations, Dominguez said.
BIR Assistant Commissioner Teresita Angeles said at the hearing that the new cigarette tax stamps will be out by October.
Dominguez likewise recalled that four months ago, he called the attention of e-commerce giant Alibaba regarding its online listings advertising the sale of digitally printed fake cigarette stamps.
“The Alibaba Group acted swiftly on our request for them to take down these listings and assured us that it will continue to exercise vigilance in screening its platforms to weed out these illicit advertisements,” he said.
The finance chief also said the BIR and BOC are now closely working together and sharing intelligence information on possible tax evasion schemes perpetrated by erring companies.
Dominguez said the IRSIS will also be implemented for alcohol products, with the BIR already signing a memorandum of agreement with the APO Production Unit for the printing of the stamps.
He said that besides implementing IRSIS, the DOF is also “bringing in all the powers of modern information technology to make electronic governance real and ensure a sustainable fiscal position” and “continuously fighting red tape and taking steps to improve our economy’s competitiveness.”
“Our nation today is fiscally secure in the face of global and domestic challenges. Several factors have contributed to this stable fiscal status. Among them is our improved revenue collections, which, in the first 10 months of the Duterte administration reached P2.09 trillion,” Dominguez said.
He said this figure is seven percent higher than the same period in the previous year. “For this, credit should go to the administrative reforms in our main revenue agencies, the BIR and the Bureau of Customs, that have substantially improved our revenue effort.”