BIR’s income tax drive targets 1.5 M professionals

MANILA, Philippines - The Bureau of Internal Revenue (BIR) is targeting 1.5 million professionals including top-earning lawyers and doctors in its campaign to make more income earners pay taxes, Finance Secretary Cesar Purisima said yesterday.

“We have a total of 1.8 million professionals. Of this number, only 400,000 are paying taxes, reporting an average income of P33,000, which is about the monthly minimum wage,” he told the House appropriations committee.

He said the ongoing campaign of the BIR is to make at least 1.5 million professionals pay taxes averaging P200,000 each.

“If we can collect that average, we will be raising a total of P300 billion from this group of income earners. If you have seen the recent newspaper advertisements, those are part of our campaign,” he said, referring to ad placements in which the BIR informed the public that tens of thousands of professionals registered in affluent Makati City paid less than the income tax payments of public school teachers.

During the hearing, Purisima gave congressmen a glimpse of why President Aquino scolded the Bureau of Customs (BOC) on national television during his fourth State of the Nation Address two weeks ago and spared the BIR.

His report showed that BOC has been lagging behind BIR in collection performance.

Collections of the Customs bureau jumped from P265.1 billion in 2011 to P289.9 billion in 2012, or by 9.3 percent, against a target of P347.1 billion, for a shortfall of P57.2 billion.

In contrast, BIR’s take improved by 14.5 percent, from P924.1 billion in 2011 to P1.058 trillion in 2012 against a goal of P1.066 trillion, for a shortfall of P8 billion.

For the first six months of 2013, BOC registered an even poorer performance. Collections increased by just 1.2 percent, from P143.4 billion for the same period in 2012 to P145.1 billion against a target of P163.9 billion, or P18.8 billion short of target.

On the other hand, BIR revenues jumped by 13.9 percent, from P521.2 billion to P593.7 billion against a target of P620.3 billion, for a shortfall of P26.6 billion.

Purisima said for the entire 2013, the BIR should collect a total of P1.254 trillion or 18.5 percent more than its 2012 collections, while Customs should meet its adjusted target of P340 billion, which represents a 17.3 percent improvement over last year.

For 2014, BIR’s collection target is P1.456 trillion (16.2 percent higher than this year’s level), while Customs’ goal is P408.1 billion (20 percent more).

Asked by reporters after the hearing if he could meet his collection targets this year and next year, Customs Commissioner Ruffy Biazon gave a negative answer.

He admitted that his agency has not been collecting what the administration wants it to collect but stressed, “we have been posting an increase in our collections every year. Our collections have been the highest in the history of the bureau.”

Responding to another question, he said he does not know why his bureau is expected to raise 17.3 percent more this year and 20 percent more next year.

“It’s beyond me,” he said, indicating that part of the blame for his agency’s failure to meet its collection goals should go to the Development Budget Coordination Committee, which sets such targets.

Among the members of the committee are Purisima, Budget Secretary Florencio Abad and Executive Secretary Paquito Ochoa Jr.

Purisima said revenue agencies have to improve their performance so they can raise more money to support a national budget that is increasing every year.

He also reported that collections from sin taxes jumped by 46.1 percent to P38.5 billion for the first six months of this year, from P26.4 billion over the same period in 2012.

“This despite a 50-percent drop in withdrawals (of sin products from factories) due to overstocking before the sin tax law took effect. We will see the full impact of the law next year,” he said.