Byline: GENALYN D. KABILING

Govt expects P10-B hike in taxes, duties

Internal revenue and customs officials and employees who fall short of the agencys annual revenue targets may now be discharged from service. Corresponding rewards, on the other hand, await tax collectors who

surpass their goal on revenue collections. This new system of rewards and penalties for the two main revenue-collecting agencies is contained in Republic Act No. 9335, or the Attrition Act of 2005, signed in Malacanang yesterday by President Gloria Macapagal Arroyo. (See full text on Page 11.)

BIR Commissioner Guillermo Parayno even offered "to be the first one to go" if his agency fails to meet its P547-billion collection target this year.

At the signing ceremony in Malacanang, the President commended the two houses of Congress for the passage of the attrition law, which she called the "Accountability Reform Law," the reconciled version of House Bill No. 2996 and Senate Bill No. 1871.

Arroyo said the new legislation, which seeks to improve the efficiency of revenue-collection agencies and thus boost the governments dwindling finances, will pave the way for a much faster economic turnaround.

"The buoyancy in the economy, combined with an equitable revenue program, and a strong fight against corruption are setting the stage for a decisive turnaround that will bring more investments and jobs for our people."

The government is expected to earn at least P10 billion from the attrition law with the expected improved tax collection efforts of the BIR and BoC.

The attrition law is the second revenue measure the President wants Congress to pass by April to boost government coffers by P80 billion. Arroyo had earlier signed into law a bill on higher excise taxes on alcohol and tobacco products.

The attrition law provides for the creation of a Reward and Incentives Fund and a Revenue Performance Board to encourage the BIR and BoC officials and employees to go beyond their revenue targets.

Parayno hailed the passage of the law which he said is long overdue. The governments top tax collector said he will vacate his post if the BIR fails to meet its collection targets for the year.

"Im the first to go if I dont reach my target now under this law and I think its all right, that they always must look for the best man for the job."

He said he will relieve non-performing employees to enable the agency to meet its revenue targets. "Anybody who does not contribute or any office that will fall short of target and any official who will not reach his target and cannot explain to the satisfaction of the board the reason for the shortfall can get out right away."

Under the new law, the incentive fund will be sourced from the collection of the BIR and the BoC in excess of their revenue targets for the year. If the collections of BIR and BoC exceed the collection targets by 30 percent or less, 15 percent of this excess collection will go to the incentives fund. If the collections are more than 30 percent of the target, 15 percent of the first 30 percent plus 20 percent of the remaining amount will go to the fund.

Any incentive will be divided among the various units, officials and employees of the BIR and the BoC. Should the BIR or the BoC fail to meet its revenue target by less than 10 percent, the BIR revenue districts or BoC collection districts which exceed their revenue targets shall be entitled to rewards and incentives amounting to 10 percent of the excess of its allocated target.

The Revenue Performance Evaluation Board to be headed by the secretary of the Department of Finance which will allocate, distribute and release the incentive fund to the concerned beneficiaries, according to the law.

The board will also prescribe the criteria and procedures for removal from the service of officials whose revenue collection falls short of the target by at least 7.5 percent.

It will submit a performance evaluation report to Congress every year.

Violators of the Attrition Act of 2005 or those guilty of "negligence, abuses, or acts of malfeasance" in the performance of their duties will be held liable for any loss or injury suffered by any business establishment or taxpayer.

An official or employee whose employment is terminated may appeal his/her case to the Civil Service Commission or the Office of the President. The Department of Finance, the Department of Budget and Management, the National Economic and Development Authority, the BIR, the BoC, and the CSC will jointly draft the implementing rules and regulations for the new legislation.

Parayno added they are prompted to increase their tax effort as the administrative measure asks the bureau to collect at least P10 billion and that they are now in the process of allocating the target of P547 billion given by the national government "equitably and fairly and scientifically across all our revenue offices or units."

"Because if it is not fairly distributed, it will also be rejected and it will not create an atmosphere we want which is optimum performance."

He also said that the BIR is uncertain if they could reach the P15-billion excise tax worth because of the long-term realization of the efficiency of the signed law.

He then lauded the people behind the passage, the ratification and the signing of the Accountability Reform Law or the Attrition Act.

"I think we should credit our congressional leaders and the President for being able to push this finally," he said.

VAT increase will not affect poor Bunye

Press Secretary Ignacio Bunye yesterday said the proposed bill that seeks to hike the value added tax (VAT) rate will not affect prime commodities and will hardly be noticed by ordinary Filipinos.

In a radio interview, Bunye said the proposed amended VAT law provides for many safety nets and exemptions from its coverage of basic goods, particularly agricultural products like rice, pork, fish, vegetables and other items which constitute about 70 percent of what ordinary Filipinos buy in the market.

"Even the VAT on instant noodles which seems to have become a favorite among the masses will perhaps increase their prices by one or two centavos only and will hardly be felt.

"The one- or two-centavo VAT tax equivalent, however, polled together could mean substantial help for the national coffers."

Bunye said that as a consumption tax, VAT is largely shouldered by high-end consumers or spenders.

"If one eats in a carinderia, he is not charged any VAT levy. He pays such tax only if he eats in classy restaurants, and those charged to pay it can certainly afford to do so."

GMA defends VAT hike proposal

Believing her proposed two-step increase in the value added tax (VAT) system is the countrys "ticket to economic freedom," President Arroyo yesterday pressed Congress to hasten the passage of the third administration-backed tax reform measure.

Amid snowballing criticisms that her proposal to raise the VAT rate by two percent is anti-poor, Arroyo also agreed to take heed the "well-meaning" suggestions from all sectors, including the opposition bloc, to shield the poor from the impact of the tax measure.

"I hope by tomorrow by the latest the House will pass the VAT," she said at the signing of the Lateral Attrition Act in Malacanang shortly before she convened the Legislative Executive Development Advisory Council (LEDAC).

The President met with several administration and opposition lawmakers and some Cabinet members in Malacanang to discuss additional safety nets to spare the marginalized sector from the impact of the VAT hike.

Arroyo said the executive branch is working with Congress "to build in the safety nets to cushion the effect and impact of new tax measures on the poor should there be any."

"We are willing to listen to all well-meaning proposals in this direction whether these come from administration allies or opposition or various groups that have the interests of the people in mind." (GDK)

Joker threatens to block VAT bill in Senate

Administration Sen. Joker Arroyo yesterday threatened to block the passage of the bill to increase value added tax (VAT) rates from 10 to 12 percent as he lamented the absence of any provision in it that would lift the VAT exemption of independent power producers.

He said he would do everything to prevent the bills passage in the Senate since the version the House of Representatives intends to approve failed to have a provision that would repeal a single provision in the Electric Power Industry Reform Act (EPIRA) which renders the sale of electricity generated VAT-free.

Arroyo was referring to Section 6 of the EPIRA which reads: "Pursuant to the objective of lowering electricity rates, sales of generated power by generation companies shall be value added tax zero rated."

"With this one sentence, IPPs are effectively exempted from any VAT," he noted. "Theres a bill now, which is pending in the House and in the Senate (but) that would not lift the exemption of the IPPs.

"I have been wondering why the IPPs have been able to get away with this once. A big portion of our public debt has been caused by the IPPs. They make a lot of money yet they are taxed only about 3 percent of their gross sales. So this is the problem that we have and I intend to fight this VAT (bill), especially with what I have discovered about this illegal, anomalous and irregular exemption, which nobody tried even once to discuss."

He said the proposal of the government to increase the VAT rate from 10 to 12 percent is anomalous due to its failure to explore the lifting of VAT exemption for IPPs. (Gabriel S. Mabutas)

Businessmen urged to explain VAT hike to people

Administration solons yesterday called on businessmen to help the government in explaining the minimal impact of the two percent value added tax (VAT) hike particularly on basic commodities since they are in the right position to do so without political considerations.

The call was made by Reps. Mikey Arroyo (Lakas, Pampanga) and Ernesto Nieva (LP, Manila) who said the business sector has given assurance that the impact of the VAT hike on the prices of prime commodities is a minimal average of 1.8 percent.

Arroyo also renewed his call to exempt wheat products like flour, bread and noodles from the VAT hike.

Industrialist and consumers welfare advocate Raul Concepcion has given assurance that the impact of the VAT scheme on the prices of prime commodities is a minimal average of 1.8 percent.

Nieva, chairman of the committee on peoples participation, said the business sector should conduct an information campaign about the minimal impact of the VAT hike on prime commodities to thwart any attempt by unscrupulous traders to take advantage of the tax increase to raise their prices.