This administration has consistently expressed intolerance toward corruption in the government. In his unique language, the President, in no uncertain terms, promised that corrupt government officials will be dealt without compromise.
The Bureau of Internal Revenue and the Bureau of Customs, responsible for more than 90 percent of the country’s revenues, are among the government agencies that have been tainted with irregularity that lasted many administrations. Corruption in these agencies appears so deeply ingrained that the prior administrations’ efforts in implementing anti-corruption measures have not been successful.
I am the principal author of the Republic Act 9335 of 2005 or the “Lateral Attrition Law,” which aims to address two serious problems in the BIR and BoC—meeting their collection targets, and providing a merit and demerit system by way of financial incentives for proper and effective collection to revenue collectors. Under the merit and demerit system, collectors who exceed their collection targets keep the excess as a reward. This reward is shared down the line, from the collector to the rank and file. Undercollection without justifiable cause will hold the collector accountable to the extent of lateral transfer, or even removal.
The financial incentive discourages receiving bribe money or under-the-table agreements, which is notorious in our revenue collection agencies.
The Lateral Attrition Law was suspended during the past administration. I am encouraged that Secretary Dominguez committed to implement it this year.
Stepping up the objectives of the Lateral Attrition Law, I intend to pass a legislative measure where the compensation of revenue collectors will be based on the percentage of their collections, and review present laws regarding wages, salaries and bonuses. A purely rewards-based system of compensation is a strong incentive that encourages efficient revenue collection.
Perception is, some employees and collectors in the BIR and BoC are underperforming because they receive regular salary, and sadly, find creative ways to make money. A purely rewards-based system will convert the feel of a bureaucracy and professionalize the institution by creating a working atmosphere akin to a career position.
We can explore the privatization of some, if not all, functions relating to tax administration. In other countries, such as Peru, the Superintendencia Nacional de Administracion Tributaria (SUNAT) was established to make the country’s tax administration autonomous, having its own pay scale and standards. A similar approach was taken by several countries to maintain the integrity and competence of their respective Central Banks. The SUNAT, on its first three years of implementation, doubled its revenues as a percentage of the Gross Domestic Product. This “privatization” approach made the tax administration function more like a private enterprise.
In highly developed countries, such as those that are a part of the Organization for Economic Cooperation and Development (OECD), taxes may be remitted through private banks, and tax debt collection is outsourced to private collection agencies.
If the BIR and BoC, which perennially fail to reach their targets, are too resistant to change, we should also consider the option of abolishing them and give our tax and customs duties to private entities whose income will be a percentage of their total collection. This way, we can reduce, and hopefully eliminate graft and corruption, at least in the field of tax administration.
I anticipate strong, and even violent objections to my proposed measure. I hope the public will understand that only radical solutions can be effective against an age-old culture of inefficiency and corruption that seems ineradicable in our collection agencies.