BIR misses January tax collections target
Is the Aquino government's name-and-shame campaign meant to improve revenues not working?

MANILA, Philippines [UPDATED] – The tax agency missed its January collections target despite ongoing name-and-shame campaign that was meant to improve revenue administration.

According to the Bureau of Internal Revenue (BIR), tax collections in January reached P85.15 billion. While officials have stressed that this figure is higher than the P74.57 billion collections in the same month a year ago, this is below the target for the month of P87.28 billion.

The government depends on BIR’s performance for 70% of its total revenues, which in turn finances social services, military spending, infrastructure investments, among others.

Under the Aquino government, the economic team, led by Finance Secretary Cesar Purisima, has pursued a strategy of public shaming of individuals and entities allegedly remiss in settling tax obligations.

Numerous tax evasion and other tax-related cases have been filed in the Justice Department and different courts since 2010, when the Aquino government took over the reigns of the government. The list of defendants include personalities considered to be on the other side of the political fence, such as former President Arroyo’s son, Mikey, and her former ally, former Economic Planning Secretary Romulo Neri.

Aquino has made a campaign promise not to raise taxes, opting instead to prioritize efforts to improve tax administration through this strategy.

In 2011, however, the BIR missed its collections target again. There was little fanfare in BIR’s performance then since the government spent less than it should during the year, keeping the budget deficit also lower than target.

Hits and misses

Of the P85.15 billion in tax revenues, the BIR raised P80.69 billion from the agency’s operations and P4.46 billion from non-BIR operations.

Revenues from BIR operations come from collections of the different districts. Income from non-BIR operations comes, on the other hand, comes from final withholding taxes on interest payments and documentary stamp taxes due from government debt securities issued by the Bureau of the Treasury.

BIR Commissioner Kim Henares said that the latest collection figures indicate that the agency is well on track to hitting the P1-trillion collection mark this year.

“It’s an indication that we will exceed the P1-trillion mark. With the performance, we are optimistic, we will achieve our target,” Henares told reporters on Monday, March 19.

The BIR is tasked to raise P1.066 trillion this 2012, much higher than the revenue goal of P940 billion set for last year.

Henares said that the year-on-year increase of 14.19% is significantly higher than the economic growth last year of 3.7%.

Reform programs

Henares said the agency is hoping to meet the 2012 collection target through the following reform programs:

  • tightening its watch on self-employed individuals, particularly the high-earning sector such as doctors, accountants and lawyers
    • About one million self-employed individuals and increase collections to P95 billion a year from the measly P9 billion. Based on the BIR’s estimates, the average tax being paid by self-employed individuals is only at P5,000 per individual even as this should increase to roughly P100,000
  • continue filing cases against suspected tax evaders through its Run After Tax Evaders (RATE) Program



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