BIR, Customs seek lower revenue targets for rest of 2002

After missing their first quarter revenue targets, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) want to downscale their targets for the rest of the year, saying that gross domestic production (GDP) would not grow fast enough to support the targets set at the beginning of the year.

According to the BIR, GDP would grow by only two percent this year, far below the projection made by the National Economic and Development Authority (NEDA) which placed GDP growth at 4.5 to five percent.

In a confidential report, BIR said its P7.2-billion revenue shortfall was due mainly to low production of excisable goods where the bureau collected P3.8 billion less than its target.

According to the BIR, year-on-year sales of beverages dropped by 31.7 percent while production dropped by 27.4 percent. Petroleum production, on the other hand, dropped by 25.8 percent while sales fell by 14.2 percent. Only tobacco production went up marginally by 2.8 percent while sales grew by 5.2 percent. The BIR also reported that falling interest rates ate into revenue collections to the extent of P3.5 billion.

On the other hand, the BOC reported a P2.3-billion shortfall due to the slowdown in imports which the agency said indicated slower growth in the succeeding quarters.

The National Statistics Office reported that imports fell by nine to 10 percent but the BOC reported that the decline was actually bigger which it estimated at around 25 percent.

According to a top-level source, the BIR and the BOC released the performance report but took the documents back immediately supposedly to keep the information from leaking out.

The source said the BIR now wants the Development and Budget Coordinating Committee (DBCC) to scale down its revenue target by at least P7 billion, saying indications of slower economic growth warrant a reduction.

On the other hand, the source said the BOC is asking for a P10-billion reduction in its own 2002 target because it did not expect imports to make a dramatic recovery even during the second semester when the US economy was expected to pick up.

On the whole, the scaling-down proposed by the BIR and the BOC would reduce the Arroyo Administration’s overall revenue targets from P447 billion to P440 billion.

In 2001, the administration had agreed to downscale BIR and BOC’s target by almost P20 billion.

BIR’s performance during the first quarter came as a surprise to no one with the bureau itself expecting to miss its own target which it earlier criticized as "unrealistic."

According to the Department of Finance, however, this was partially offset by government’s P9-billion savings generated from declining interest rates that brought down its interest expense during the period.

The perennial failure of the BIR to meet its collection target has prompted the DOF to consider the proposal to transform the agency into an autonomous authority that would be a government-owned and controlled corporation (GOCC) in character.

According to Finance Secretary Jose Isidro Camacho, there is a need to restructure the bureau into an independent body that will have a relative leeway in selecting its employees and adjusting the salaries of its workers. "The idea is to take away the alibi that corruption is caused by low wages in government," Camacho said.

Camacho said the evolution of the BIR into a GOCC will ensure its long-term efficiency and reliability in dealing with leaks in the tax collection system that cost the govenrment at least P242.47 billion a year.

Spinning the BIR off into an autonomous agency, however, would require legislative action. If approved, the bureau would be headed by officials with fixed term of office that were not co-terminus with the appointing authority to ensure independence.