Tax bureau tags priority areas for improvement

STRATEGIC AREAS for reforms this year have been identified by the Bureau of Internal Revenue (BIR) under the aim of modernizing tax administration to make it more convenient, efficient and transparent.

“The BIR is committed to collect taxes for nation-building through excellent service,” BIR Officer-in-Charge Deputy Commissioner Marietta U. Lorenzo said during the 1st Philippine Tax Summit yesterday.

The bureau’s Tax Reform Administration group, in particular, aims to re-engineer processes and systems as well as develop expertise through training and capacity-building.

In the area of registration, the BIR hopes to expand its taxpayer database and clean up inactive entries, Ms. Lorenzo said. It also wants to implement a geographical information system to keep tabs on taxpayers. An online ledger will also let people track their tax payments.

For tax filing, the bureau will set up more data processing centers and redesign its forms. New annual income tax returns were launched last year, to be used for declarations that are due this April.

The bureau is also keen to open alternative payment modes such as the use of credit cards. It also hopes to launch a collection reconciliation system so that payments are not credited to multiple revenue offices.

Other reforms include risk-based audits so the BIR can focus its limited resources on high-risk entities for investigation, Ms. Lorenzo said. The bureau will also set up data-sharing and data-matching linkages with other government agencies to help in the assessment of tax liabilities.

An “enhanced legal enforcement strategy” will be pushed by the BIR this year, spearheaded by its Run After Tax Evaders program. A “tax rulings and case management system” will also let the bureau monitor the progress of tax evasion cases.

Lastly, taxpayer services will be enhanced via public awareness campaigns, contact centers and eLounges. Officials have said that about 30 eLounges will be set up this year, so that taxpayers with no Internet access can use the bureau’s online services.

During the summit, meanwhile, University of the Philippines economist Benjamin E. Diokno called on the Aquino administration to pursue other reforms beyond tax administration.

“The Philippine tax system is low-yielding, inefficient, inequitable and difficult to administer,” Mr. Diokno, a former Budget secretary, said.

He claimed that fiscal incentives — “the tax equivalent of the pork barrel” — are given away to favored firms, even though they are redundant. Excise taxes on “sin” products, like liquor and tobacco, have likewise been eroded by inflation, he added.

Mr. Diokno said the system also burdens productive sectors with up to 32% in income taxes — “one of the highest rates in the region” — while consumption is only charged a value-added tax (VAT) of 12%. He recommended a 15% income tax and a 15% VAT.

“A bold tax reform program can address the country’s stubbornly low tax effort. In 1986, taxes comprised 17% of GDP. Now, it has fallen to just 12%,” Mr. Diokno said. –DIANE CLAIRE J. JIAO, Reporter, Businessworld