President Arroyo ordered the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) yesterday to clamp down on tax leaks by exerting more effort in collecting unpaid, underpaid or undeclared taxes and duties due the government.
The President issued these orders during the first-ever Revenue Performance Command Conference she convened yesterday with top officials of the Department of Finance and the regional and district collectors of the BIR and BOC.
With the nation’s budget deficit for the first seven months of the year now at P133 billion — P3 billion over the expected deficit of P130 for the entire year — Mrs. Arroyo convened the command conference to draw up specific measures that will increase the BIR and BOC’s tax collections so tenable both agencies to meet their collection targets for the last quarter of 2002 by yearend.
The President called to the meeting her economic managers led by Finance Secretary Jose Isidro Camacho, Budget and Management Secretary Emilia Boncodin, BIR Commissioner Guillermo Parayno and Cutsoms Commissioner Antonio Bernardo.
The President said the BOC and BIR are to help mobilize all local government units (LGUs) in "legitimizing" the "underground" economy businesses operating in their areas of jurisdiction so that these business pay the proper taxes to government.
Mrs. Arroyo also ordered the BIR and BOC to coordinate with LGUs in simplifying the process of obtaining business permits so that the so-called "underground businesses" will be encouraged to legitimize their operations.
According to Parayno and Bernardo, the entrepreneurs who go into such underground ventures are turned off by the difficulty and red tape involved in obtaining a legitimate business permit in most LGUs and so they are not part of the tax-paying mainstream business community.
"I don’t want to back-seat drive them," the President said, adding that Parayno and Bernardo "have been in these jobs and they know what to do."
Camacho said the conference sought to establish the "baseline" of tax collections against which the future performance of the BIR and BOC would be measured.
"It’s not revising our targets," Parayno said of the meeting, adding that this "baseline" will give the government leeway to create "ways and means (to develop) better collection efforts."
Parayno said he would issue 600 demand letters to individual businesses found violating the Value Added Tax (VAT) law. The letters will begin arriving at their recipients’ doors next week, he said.
"In our letters, we ask them to pay their taxes within 30 days and tell them we have the technology to determine what they exactly declare as sales as against their declared taxable income," Parayno said.
He said the issuance of these demand letters was part of his bureau’s Reconciliation of Listings for Enforcement (Relief) program in which all VAT, income and excise tax declarations of companies are matched with customers’ declared purchases.
As for the BOC, Bernardo said he informed the President that they intend to revise their whole-year collection target for 2002 to P99.6 billion from the original target of P115 billion.
Bernardo said the estimate for the BOC’s revenue collection target was based last year on a lower peso-dollar exchange rate assumptions.
According to Bernardo, every P1 drop in the peso-dollar exchange rate translates into P1.2 billion in duties or tariff payment losses in the BOC’s revenue collections on imported goods. — Marichi Villanueva