Dismissals at BIR are what’s needed

The message is in what wasn’t said. In explaining his resignation as BIR chief, Rene Bañez wailed that "a few perpetrators are out to sabotage (my) reforms by deliberately cutting back on collections during the first half (of 2002) ... By doing so, they are holding the country hostage in their desire to protect their their personal interests." By implication, he meant that fewer BIR officers were on his side than the few saboteurs. He had to leave because he didn’t have sizeable following. By implication, too, he never was able to reform the BIR in the 19 months he was there. It takes support to institute changes.

These points, in turn, raise questions on why there was resistance to Bañez. Did the insiders doubt his integrity? Or did he simply not have the knack for managing the agency?

Accusations have been aired about Bañez’s conflicts of interest. As a vice president of Metro Pacific Group before joining the BIR in January 2001, the lawyer-accountant had advised the firm on legal and financial matters. Metro Pacific jointly owns with the government the Fort Bonifacio Development Corp. Of note was FBDC’s five-year plea, repeatedly denied by the BIR, for exemption from P1.07 billion in documentary stamp tax (DST) arising from its purchase of Fort Bonifacio from the government. When the BIR issued in December 1999 a final order to pay up, the firm took the case in July 2000 to the Court of Tax Appeals, where it pends to this day. Yet in November 2000, the budget department sneaked a SARO (special allotment release order) to cover the amount. In effect, government paid for the tax that a private firm owed it. And it did so in violation of the Revenue Code that states that no land buyer shall be exempt from DST, which shall always be paid in cash.

"So what?" Bañez had dismissed the accusation. He was not yet in government when all this happened. If someone must answer, it’s former President Joseph Estrada’s budget chief who signed the irregular SARO and the national treasurer who accepted it. But then, the P1.07 billion was credited to the BIR only in February 2001, when Bañez already was at the helms. If he believed it was an infraction by the past administration, he could have questioned it. Yet it was that book entry that enabled him to trumpet excess collections of P320 million in 2001.

Rep. Aniceto Saludo (Southern Leyte) examined Bañez’s other acts for his former employer. The tax court had ordered the BIR in December 2001 to refund FBDC P15 million in value-added taxes on land sales and leases.

The BIR should have appealed the case, Saludo said. But it didn’t, so the order became final and executory a month later. In January 2002, the tax court told the BIR to refund FBDC another P77 million in VAT. Again, the BIR didn’t appeal. Bañez has described the alleged sins of omission as rehashed mutterings of revenue officers he had sacked for corruption and inefficiency. Yet the P92 million in total refunds ate into his collections, which was P33.46-billion short of target in the first half of 2002.

Saludo is building a case of plunder against Bañez. His findings will soon be a matter for the court to verify or trash. But the other question of management skill still haunts Bañez, whose resignation elicited groans from businessmen. (Other business leaders were elated. Car makers, who felt that Bañez was taking out on them his poor collections, wish Finance Secretary Jose Isidro Camacho would junk Bañez’s proposal to increase specific taxes on Asian utility vehicles, which could drive sales down and lead to bigger losses in sales taxes.)

Bañez said he had removed at least 16 bad eggs. Presumably, he replaced them with persons of his confidence and who believe in reforms. Yet his collection was so short of target that the projected budget deficit of P130 billion for the whole of 2002 already hit P120 billion by mid-year. Were the bad eggs ever punished? What about the replacements who turned out to be as inefficient, if not corrupt? Bañez never identified the saboteurs who pulled him down. He just said "they are undermining the principles behind the reforms through a campaign to misinform the rest of the workforce." He must have been referring to last Friday’s noisy picket of BIR employees against the Congress bill to transform BIR into a council-led Internal Revenue Management Authority (IRMA).

IRMA would force through legislation a reform that Bañez has long advocated: reorganizing the revenue staff by departments, depending on the nature of taxes to be collected. Bañez also has lobbied for a provision that would force officers and staff into early retirement should they fail to meet collection targets.

Passage of the IRMA bill would take months, if at all. Speaker Jose de Venecia had filed it only two weeks ago. After committee and plenary deliberations, it would still have to go through the Senate. Meantime, the clock is ticking fast on Bañez’s temporary replacement, Finance Undersecretary Cornelio Gison. Government’s growing deficit spending is threatening to explode into a Brazil-type inflation and devaluation.

Businessmen are wondering if Gison or a permanent appointee can do a Joey Lina on BIR officers. That is, set a performance score sheet and remove them the moment they fail – the same way the interior secretary had sacked PNP generals for failure to curb jueteng within deadline.

The task looks dauting. Civil service laws seem to favor underperformers in government. Then again, his friends in the business community compare what happened to Bañez to former SSS president Vitaliano Nañagas. The reformist finance man was said to lack good personnel relations that is required of public administrators. Hundreds of SSS employees walked out of their jobs last year to protest his management style. President Gloria Arroyo had to pacify the strikers by removing Nañagas. But two dozen of them are now facing dismissal from public service for staging the wildcat strike. Their union is not paying for their legal defense.

BIR insiders murmur that massive tax evasion had marked Bañez’stenure. They won’t conclude, as Saludo does, that it’s because of Bañez’s poor example through seeming conflict of interest. They acknowledge, though, that heads would have to roll because of unmet targets.

* * *

You can e-mail comments to [email protected]