Before anything else, I would like to bring to mind the fact that today is the 7thanniversary of the death of Corazon C. Aquino. I would like to ask you to remember her in your prayers. I always remember her as my boss, but I always admire her for the fact that she stood up and went for elections and served our country with honor. Had she not done that, I think we were headed towards a worse future, possibly a civil war. So I commend her to your thoughts and prayers, President Corazon C. Aquino.
Allow me to greet you all a happy anniversary. 112 is a good age. I’m sure that Former Commissioner Tan will reach that in a few years and we will be celebrating with him on his 112th birthday.
The Bureau of Internal Revenue collects three-quarters of our revenues. That alone shows how important this bureau is. Any slack in the agency will reflect massively in the government’s bottom line. Conversely, any improvement in performance, independent of any extraneous factors, will bring massive benefits to our nation.
So much depends on the BIR’s performance each year. We need revenues to pay for everything from our foreign debt to our infrastructure needs, to the salaries of the one and a half million or so government employees. We need them to keep our health care in place, pay our teachers and soldiers, and invest in social goods.
This and the coming years will be more challenging for the revenue collecting agencies. The new administration decided to propose legislation cutting tax rates for individual and corporate taxpayers. This is necessary to improve our people’s purchasing power and to make our companies more competitive. We should be able to compensate for this rate reductions by rapidly broadening the tax base and improving VAT collection efficiency.
There has been a proposal to increase the VAT rate to 14% to offset the income and corporate rate cut. I am inclined against that proposal. By some estimates we could double VAT collections simply by being more efficient in collecting it.
These past few months, I have had the pleasure of reflecting on the result of the current elections and on what the president has said in the last few days, especially in the SONA.
Essentially when you listen to our president, he has said that what is more important to him than the first 100 days is the last 100 days of this administration. He said that in the last 100 days, he would like to leave the country with three things.
First is to reduce the poverty from 26% to around 17%. Second, to have a law-abiding society, where obedience to the law is not optional. And third, to leave a lasting peace to the communist rebels as well as the Islamic separatist movement.
I would like to invite you to think about how the BIR can contribute to these three goals of our administration.
First, to reduce poverty from 26% to 17%. That means a poverty reduction of around 1.5% a year. To do this we have to have more infrastructure, we have to moderate our population growth and we have to encourage more investments so that more jobs are created in this country. How can the BIR contribute to that? We need revenues to spend on infrastructure. We need help and encouragement from the BIR to our taxpayers so that we become a more investment-friendly country. So there are many other things that I hope in that area that the men and women at the BIR can think how they can contribute to the reduction of poverty in this country.
Second, the president has ….. a society in which obedience to the law is not optional. He wants no drugs, reduction in crime and a society in which taxes and duties of the citizens…are taxes are paid and the citizens perform their duty in obeying the law, including traffic law. Here again, how can the BIR help in the performance of those…in the achievement of those goals. Obviously you have to make sure that your tax collections are vigorous, and that they are fair, and that they are done with no hint of any corruption.
Lastly, the president wants to leave a lasting peace with the communist rebels and the Islamic separatists. To do this, it’s not only necessary to have a peace process, it’s not only necessary to come up with a signed document, what is more necessary is that we have job opportunities and that these job opportunities are available to all the communist rebels as well as the Islamic separatists. Again, the BIR can contribute to this by making sure that there are enough revenues for us to create the infrastructure necessary in the areas they occupy and to make sure that businesses there are treated fairly and look upon us as a help to their business rather than a hindrance.
There are some things we could do short of raising new taxes. The BIR, for instance, can reorganize the Large Taxpayers Unit responsible for the bulk of collections. I cannot imagine that we only have 2,800 so-called “large taxpayers.” The numbers should at least be double that.
We have to grow our revenues faster. The current tax efforts among our neighbors run as high as 17%. The last time we reached that, I think the first and the last time we reached that, was under the leadership of Commissioner Chato, and I think we should congratulate her for that. We should challenge Commissioner Dulay to reach and improve that record.
It will help, as our pastor just said, if the Bureau will help correct its “image problem.” With a better image, the BIR could convince its detractors. It could emerge into a more compelling agency.
It might have if the BIR is able to hire younger people into its service. I understand that your average age in the BIR is somewhere around 47 years old. I think we should bring that down to probably 35, have big efforts towards hiring young, well-educated college graduates. I think it should be a major program.
There are a few more things that can be done..
We can have cleaner, airier and more welcoming offices, for instance. Let the taxpayers breathe. You are collecting their money after all.
There must be a way to eliminate long lines at the BIR offices. Why punish them when they have come to pay?
And, yes, even the BIR can hire a visual artist or copy editors to simplify the confounding forms that our taxpayers have to fill. I was informed that Former Chairman of SGV Gloria Climaco in the past filled out her own BIR forms. Now she has to hire an accountant to do it. So I hope that simplified forms for smaller companies or individuals can be made. There is really no need to make our clients feel exasperated trying to fill up the forms.
Finally, please, try hard avoiding dropping hints or propositioning our taxpayers. We all know the colorful stories said over and over again. I will not repeat them here, but say that our family has been subject to that.
It might be a little naïve, but I will say it anyway. We all joined government to serve our people. If you have difficulty embracing that, perhaps other sources of employment might be suitable to you.
A new BIR commissioner has been appointed. I know him to be a competent and incorruptible lawyer. I trust he will have your support as we shore up our public revenues. I know there are reforms he has lined up and these reforms will help us achieve the high goals we set for ourselves.
In the end, however, revenue collection remains a matter of public trust. This is a most patriotic service: it requires us to do what we must do proudly.
I would like to say that at the end of my term, when I come back and bid you farewell, that I will come to the BIR and say “there’s no corruption here, not now, not ever.
Thank you very much.