EDITORIAL - Don’t overlook the BIR

Long before the flood control scandal blew up, surveys already consistently showed the Bureau of Internal Revenue competing with the Bureau of Customs and the Department of Public Works and Highways as the most corrupt government agency.

So it’s not surprising that another controversy has emerged, with the Senate reportedly planning to summon BIR officials to explain complaints about the abuse of field audits, mission orders and so-called letters of authority or LOA.

One company, for example, was reportedly assessed to have P150 million in tax liabilities. BIR examiners allegedly gave the company a “discount” of P25 million, assessing its liability at only P100 million, with the remaining P25 million going to the BIR personnel as kickback.

Senators said the racket had been going on for some time, but intensified in 2024, and could have worsened further this year as national attention was focused on the budget and public works anomalies. Even tax-compliant companies have been victimized, the senators said.

The BIR under new Commissioner Charlito Mendoza, like the new management in the Bureau of Customs, has suspended the issuance of LOAs as a probe gets underway and reforms are considered.

Tax assessment, under the current system, gives BIR examiners wide discretion to determine how much companies owe the government. In this country, any revenue-raising activity that provides that kind of personal discretion is almost always abused by the corrupt.

Any reform in both the BIR and BOC must drastically reduce the exercise of that personal discretion within the system. Digital technology offers many tools along this line, which may not only plug opportunities for corruption but also make revenue collection more efficient.

The BIR and BOC may also consider setting up a transparency portal where complaints can be sent anonymously by taxpayers, or reports of anomalies can be posted.

BIR employees submit statements of assets, liabilities and net worth to the Civil Service Commission. The BIR can work in tandem with the CSC to compare the SALNs of officials and employees suspected to be living beyond their means with their income tax returns.

Spotting such suspicious officials and employees should not prove difficult for the BIR. Between 2013 and 2019, police counted at least 15 officials of the BIR, mostly district officers, who were reportedly kidnapped and released after payment of ransom amounting to P36 million, P60 million and up to P130 million. Since they would have found it complicated to explain how they managed to earn such amounts, no formal complaints were filed and the cases went cold.

If kidnappers can identify such victims, surely those conducting a housecleaning in the BIR can do the same. Perhaps this controversy over LOAs can ferret out the crooks.