BIR targets too high, says IMF

The International Monetary Fund (IMF) said the Bureau of Internal Revenue (BIR) may be able to collect no more than P3 billion in additional revenues from its intensive audit program.

The BIR has set the revenue target under the program at P12 billion.

"Acknowledging past performance and the late start of the program, a result over P2-3 billion is difficult to conceive," the IMF said in a paper.

The BIR implemented a new audit program for different areas covering the period June to August this year.

While this is not essentially a "new" measure, the IMF said the issuance of letters of authority for audits had been suspended in late 1999.

When BIR Commissioner Dakila Fonacier assumed office in January, he suspended the issuance of letters of authority to audit which had been a standard procedure for incoming BIR chiefs.

The temporary suspension of the audit will enable the new commissioner to assess the existing audit program which forms part of the revenue enhancement measures proposed by the BIR for this year.

Aside from the audit scheme, the BIR has also instituted new collection arrangements for the withholding tax liabilities of the National Government and its agencies.

Under this arrangement, the BIR expects to collect about P20 billion.

However, the IMF believes that the BIR will be able to collect only P14 billion, pointing out the fact that arrangement started only in May.

Another measure is the purchase of some 4,000 metering units that would plug the leakages observed in the collection of documentary stamp taxes.

Under the metering DST procedure, the BIR will introduce new metering equipment that will be linked online to the bureau.

The BIR has also proposed the implementation of a scheme that will allow the seeking of a compromise for outstanding debts that are classified as "doubtful validity or financial incapacity" at varying levels according to their classification and age.

While the BIR is projecting revenues of P4 to P5 billion from this effort, the IMF said late implementation of this measure might limit the bureau’s collection in to only P2 billion from this program.

Another revenue enhancement measure is the excise tax on Asian utility vehicles (AUVs) for which the BIR is targeting to collect some P8 billion this year.

But the IMF expressed concern on the capacity of the BIR to collect from this program. "It depends on attitudes of taxpayers/political representations," it said.

Following a ruling made in late 1997, AUVs were deemed to be considered "automobiles," and accordingly, made subject to excise tax.

However, following representations from manufacturers made at a political level, the ruling was never implemented.