“After acting as officer-in-charge, Jose Mario Bunag became BIR Commissioner. He was the best of Gloria’s appointments in the BIR. Yet, in 2007, Bunag was fired when the BIR turned in a below-par first quarter collection.”
by Ducky Paredes
In its Philippine Quarterly Update, released last Wednesday, World Bank noted that the country’s tax effort, if we exclude the negative impact of recent storms, will likely be at the level of 12.8% of gross domestic product (GDP) this year, 1.2% lower than the budgeted 14%. Since the real figure will have to include the storms’ impact, we will actually do even worse.
The World Bank wryly notes: “The resulting tax effort would be the same as in 2002, before the E-VAT reforms.”
Should that surprise us?
It shouldn’t; after all, how many commissioners of the Bureau of Internal Revenue (BIR), the primary tax collecting agency of the government?
In 2001, Rene Banez was the first one that Gloria Arroyo appointed, after she took over from President Estrada. In 2002, former Customs Commissioner Guillermo Parayno, who turned out to be among the best of the BIR Commissioners, took over. But, along with several cabinet members, Parayno resigned with the discovery that Gloria won through cheating in the 2004 elections.
After acting as officer-in-charge, Jose Mario Bunag became BIR Commissioner. He was the best of Gloria’s appointments in the BIR. Yet, in 2007, Bunag was fired when the BIR turned in a below par first quarter collection. When was the first quarter established as a gauge for the full year’s success?
Lilian Hefti then took over and lost her job after less than a year. Hefti resigned citing health reasons. Again, the BIR did not collect what the Department of Finance had set for it as its target collection.
The recent resignation of Commissioner Sixto Esquivias IV, who disagreed with the posting of Senator Miriam’s husband as presidential adviser to oversee the Large Taxpayers Unit (top 1,000 taxpayers) and who also could not reach the impossible targets set for the BIR by the Department of Finance, is probably already proof that the incompetence is not so much with the commissioners of the BIR but higher up.
Your really should not expect too much if you give your commissioners hardly enough time to warm their seats before giving them so much pressure that they just about give up.
Tax effort which the WB says, is back to where it was prior to the E-vat is the ratio of taxes collected by the main revenue agencies, Bureau of Internal Revenue and Bureau of Customs, to the size of the country’s economy, which is mainly measured by the GDP.
As an economic indicator, tax effort grades the government’s ability to raise revenue. Our tax effort has been slipping since 2006 when it was at 14.3% of GDP. For 2009, it was 13.5% of GDP for the first half of the year.
Compared to our neighbors, the Philippines only managed to outperform Indonesia, which had a tax effort of 13.3% for the first half of the year.
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Perhaps, effort ought to be exerted to dissuade Columnist Randy David from running against Gloria Arroyo in the congressional race for the 2ndDistrict of Pampanga. According to her election lawyer Romulo Macalintal, there is no legal stumbling block that hinders President Gloria Macapagal-Arroyo to run as vice president in the forthcoming 2010 elections.
Either that or someone find a vice presidential mate for Gilbert Teodoro. According to Makalintal, President Arroyo, whose term as president expires next year, can run for any position in the 2010 elections “except for her incumbent position as President.” This is based on Republic Act 9006, otherwise known as the Fair Election Code.
Gibo is too young to suffer the fate that befell Erap when Gloria was his vice-president! Given the chance to be vice president again, would she use the position to become president again? Remember that she is not disqualified to be a President for the second time. The prohibition is only a former President’s candidacy for the presidency.
In fact, Erap disagrees. His interpretation is that only the sitting president is prohibited from again seeking the presidency through re-election.
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I am glad that the politicos themselves are already speaking out against the BIR regulation whereby campaign donations will be taxed.
Adel Tamano, spokesman for the Natonalista Party and senatorial candidate says: “When you talk about tax and revenue measures, it always have to originate actually from the Lower House. That’s in the Constitution.”
Valenzuela Rep. Rex Gatchalian of NPC agrees: “Taxation is in the realm of Congress.”
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THE Court of Appeals has dunned the Development Bank of the Philippines P100.000 for violating money-laundering laws by failing to report a suspicious transaction within the required five days.
A government financial institution (GFI) guilty of money laundering?
How it happened is that a foreigner somehow was able to hoodwink a branch of the DBP. On April Fools’ day (April 1, 2004) Jeff Tubac deposited P1,000 to open an account with the DBP branch in Cagayan de Oro. Then, having opened an account, Tubac deposited a check for $16,200 drawn against an American bank, a Charter One Bank. Tubac explained that Becky Hudson, his Internet chat mate, sent this for Tubac to open an Internet café. Payee was Tubac and a John Lewis issued the check.
DBP Cagayan then sent the check to DBP’s Foreign Currency Operations for clearing. DBP then had five days with which to report a suspicious transaction over the limit of P500,000. Actually, any transaction over the limit is considered “suspicious” for new accounts.
What bothers me about this tale is that Tubac was able to draw funds from his account twice even as the check deposited had apparently not yet cleared.
On June 3, 2004, the foreign currency office informed the branch that the check was returned due to “counterfeit drawee. ” The remaining balance in Tubac’s account was down to P150,618. DBP Cagayan sued Tubac. On Dec. 29, 2004 (such is our slow justice system), the Office of the City Prosecutor found probable cause to file estafa charges against Tubac based on the DBP’s complaint.
It was only on Aug. 15, 2005, more than a year after the branch was notified that the check was bad, that the DBP informed the Anti-Money Laundering Council (AMLC) about the “suspicious” transaction.
According to the DBP, AMLC erred in its interpretation of suspicious transactions
The Court of Appeals disagreed: “The surrounding circumstances of Mr. Tubac, being a new client of the bank, who was only 23 years old at that time, who has not proven his financial capacity, who had an initial deposit of only a thousand pesos, and who suddenly deposited a foreign check equivalent to more than P500,000, which was subsequently returned due to counterfeit drawee, are enough reasons for the petitioner to exercise its vigilance in evaluating the suspicious character of the account.”
Any rural bank would have handled that account better. Certainly, Tubac would not have been able to draw funds from his account without the dollar check’s first being cleared.
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“There was no respect for youth when I was young, and now that I am old, there is no respect for age - I missed it coming and going.” – J. B. Priestly
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hvp 11.05.09
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