Former NEDA chief supports IRMA

A former Cabinet member has expressed open support for House bill (HB) 5054, otherwise known as the Internal Revenue Management Authority (IRMA) bill.

The IRMA aims to de-politicize the Bureau of Internal Revenue (BIR) while transforming it into a private sector-run collecting agency of the National Government.

Cielito F. Habito, former head of the National Economic and Development Authority (NEDA) and Socio-Economic Planning Secretary, also called for the revamp of the Bureau of Customs (BOC).

In a forum yesterday at the Ateneo de Manila University in Makati, Habito said it is critical for the government to improve its tax collection if the Arroyo administration hopes to achieve budgetary equity by 2006.

The forum formally launched the Ateneo Macroeconomic Forecasting Model (AMFM), the centerpiece of the Ateneo Center for Economic Research and Development (ACERD) which is the research arm of the Ateneo Economics Department.

Habito explained that the current incentive structure of the BIR is one of the main reasons why we have never been able to collect taxes properly.

"In contrast, the kind of innovations in the incentive mechanisms proposed by IRMA is exactly what we need to improve the tax collection efficiency, including the way or formula to peg people’s incomes on their actual performance in producing revenues."

The IRMA in effect "corporatizes" government tax management thus permiting greater independence from political control while increasing the accountability and transparency culture. The chief executive officer (CEO) or the equivalent of the commissioner will not be appointed by the President but by an independent commission.

Thus the CEO is answerable to its "board of directors" and not to a political entity or political interests. The CEO and his professional management team would have full control of the staff with the blessings of the Civil Service Commission (CSC) thus allowing for greater accountability and flexibility.

Habito said IRMA is not an issue of autonomy or privatization.

"The corporatization plan is the kind of flexibility that is needed. As long as you have strong government strictures that make it difficult to even dismiss some erring employees, then it is hard. What is ailing our agencies including BIR is quite deep and deeply engrained. It is a culture of corruption," the former Cabinet secretary said.

Habito said honest BIR employees need not worry.

"They will likely be the ones who will constitute the "new" BIR. The corrupt ones are those who should turn white with fear."

Part of the problem is also the judicial processes which has been finding difficulty in prosecuting and convicting, and carrying the case to its logical conclusion. "Political will is obviously a key to getting things done."

Likewise, achieving efficient tax collection also warrants the prosecution of prominent tax evaders or non-paying individuals or corporations. That also means implementing stricter rules on double books or the practice of corporations to have one financial record for official reports to government and another for its internal use which is most likely stating the true financial status of the company.