BIR, BOC revamp looms over missed targets

Heads will likely roll at the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) after the two tax agencies failed to meet their respective revenue goals last year.

At the BIR, only one out of 20 revenue district officers met the target while at the BOC, only five out of 16 district officers achieved their goals.

The government’s review committee on the Lateral Attrition Act of 2005 is now deliberating on how far it would implement the law amid appeals from the two agencies, ranking government officials said.

Sources said the committee has yet to decide on the matter and has asked the BIR and the BOC to explain the reasons for the shortfall.

The Lateral Attrition Act provides a system of rewards and incentives for rank-and-file employees and officials of the BOC and the BIR who exceed annual collection targets for the government.

At the same time, the law prescribes sanctions, including the dismissal of workers who miss revenue targets by at least 7.5 percent.

The BIR has cited the removal of the cap on input value-added tax as reasons for the shortfall while the BOC said the steady appreciation of the peso against the dollar cut its revenues from import tariffs.

Input VAT is the amount of VAT that a company shoulders every time it purchases a good or a service whose price already includes the 12-percent VAT. It is deductible from one’s total VAT liabilities and output.

Congress earlier lifted the 70-percent creditable input value-added tax (VAT) cap which provided relief to local merchants.

Without the VAT cap, businessman can buy materials at higher volumes and can credit 100 percent of their input VAT.

This means that businessmen can now deduct from their total VAT obligations the VAT on the raw materials they purchased.

The BIR and the BOC have not been meeting their respective revenue targets due to rampant smuggling and widespread corruption in the two offices.

The BIR, the government’s main tax agency, collected P711 billion last year, below its P765-billion revenue goal. The BOC, for its part, collected P210 billion, also below its P228-billion collection target.