GMA set to certify National Revenue Authority measure

President Arroyo is set to certify as urgent the National Revenue Authority bill that seeks to overhaul the country’s tax collection system as the government’s tax effort fell to its lowest in nine years at 9.92 percent in 2002 and had been steadily declining since 1997.

The tax effort refers to the total tax collection of the Bureau of Internal Revenue (BIR) against the gross domestic product (GDP). This means that BIR collection, which accounts for 80 percent of total government revenues, had been weakening despite the growth in the domestic economy.

In a radio interview, President Arroyo said she would be prepared to certify as urgent the proposed creation of a new revenue authority as soon as the House committee has finalized its version of the bill.

The House committee on ways and means completed deliberations on House Bill 5465, or the National Authority for Revenue Administration (NARA) bill, and House Bill 5054, or the Internal Revenue Management Authority (IRMA) bill before it went into recess last month.

The chronic BIR shortfall had been widely blamed for the bleeding budget deficit that hit a record P210.74 billion last year and led to the downgrade in the country’s credit rating outlook by international credit rating firms such as Standard & Poor’s and Fitch Ratings.

Rep. Herminio Teves, vice chairman of the House committee on ways and means, earlier said the government will not be able to achieve its goal of a balanced budget or zero deficit by 2006 without a strong resolve to improve tax collections.

"The greatest hallmark of a strong republic is its ability to capitalize on its revenue potential so that it can finance essential services without endangering its people’s future because of onerous and unmanageable debt service obligations," Teves said.

In line with the government’s new focus towards microeconomic and supply side economic management, President Arroyo earlier called for the corporatization of the BIR which is expected to transform the country’s main revenue generating agency into a professionally-run organization.

"On macroeconomic and supply side measures, I am asking Congress to speed up the bill to corporatize the Bureau of Internal Revenue as the national revenue authority," Mrs. Arroyo said in a speech before businessmen. Supply side economics speaks of taxation as policy tool to help stimulate economic growth.

Among the authors of the IRMA bill are Speaker Jose de Venecia and Rep. Jules Ledesma while the NARA bill is spearheaded by Reps. Emmanuel Joel Villanueva, Etta Rosales, Del de Guzman, Maite Defensor, JR Nereus Acosta, and Florencio Abad.

Both bills are proposing the creation of an independent revenue authority headed by a CEO who is appointed by the policy-making, multi-sectoral Revenue Board. Both measures espouse the principles of transparency, independence, professionalism, and integrity in governance.

While BIR Commissioner Guillermo Parayno has made significant policy directives that are aimed at improving BIR collections, the creation of a national revenue authority is seen to facilitate the implementation of and institutionalize these policy changes.

The Department of Finance earlier estimated that the government loses a whopping P242 billion a year due to corruption in tax administration.