TRABAHO Bill and SB 1906: Inputs by Mon Abrea on ADMINISTRATIVE CHANGES
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Harsher Penalties
The imposition of penalties should also cover government agents and, in fact, could even be made harsher. Corruption needs to be quelled at the root and the Ease of Doing Business Act of 2018 proposes a penalty system that is worth emulating.
The first offense would only warrant a six-month suspension, but the second offense already imposes a permanent dismissal from public service. This permanent dismissal would apply to all government agencies as well. We have to put a deterrent to stop BIR examiners from accepting bribes or extorting taxpayers. The biggest tax evaders can afford to bribe examiners and get away with hundreds of millions more – possibly even billions – in unpaid taxes.
Meanwhile, small taxpayers instead of being encouraged are being harassed by examiners due to the annual audit which results to same assessment which are being compromised anyway in the end.
Similar to the EODB Act, there should be provisions wherein if BIR doesn’t issue required ruling or clearance, it becomes automatically in favor of taxpayers. This way, they don’t need to bribe BIR officials to get favorable ruling or tax clearance.
However, the only worrisome prospect of the harsher penalties is on our taxpayers.
We need to first ensure that it is easy for them to comply before making it harder on them. If the government wants to push for harsher penalties, it should come hand-in-hand with reforms that make compliance easier so there’s no excuse for non-compliance.
Power to Issue Letters of Authority and Subpoena Duces Tecum for BIR Commissioner,
Submission of Tax-Related Info to DOF Secretary, and Counteract Tax Avoidance
I agree with these administrative provisions since they will ensure that the government will have sufficient powers to go after tax evaders.
However, another measure that could be imposed is a provision on the audit of taxpayers.
Currently, the BIR’s audit is done yearly on the same taxpayers over and over again. Quality audits should be sought, not quantity. A rule imposing that audits can only be done every three years should ensure that all problems are addressed on the first audit, subject for verification but not regular audit again.
The current system is costly for both the taxpayer and the collection agency, resulting to more compromises and pending cases in courts.
BIR Audit and Investigation must be risk-based per industry. Examiners should not be auditing same companies every year all at the same time. Depending on the size and risk level of tax exposure, BIR should complete its audit in 120 to 180 days only and as much as possible NO CONTACT POLICY must be observed, basing the audit instead on information gathered through the system.
Also, to promote fair and equitable assessment, BIR examiner must have accountability on any assessment issued. If they’re unable to collect at least 50% of their assessment, it should be a demerit on their performance as they should have a strong basis and evidence for every assessment. This will stop BIR examiners from releasing baseless huge assessments.
Going hand-in-hand with these administrative changes would be raising the salaries of BIR examiners, in order to ensure more competent and less corrupt officers. It will also be important to raise the budget of the BIR itself. The tax reform intends to broaden the taxpayer base and this comes with added responsibilities and added personnel requirements.
Although these changes are beyond the scope of the Tax Code, they are nonetheless complementary measures that will ensure the proper implementation of the tax reform.
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