SPEAKER Pantaleon Alvarez has sought the strict implementation of Republic Act 9335, or the Lateral Attrition Law, following the continued failure of the Bureaus of Internal Revenue and Customs to meet their target revenues.
At a hearing of the House committee on ways and means on the Department of Finance’s budget, Alvarez said that the past administration failed to implement the Lateral Attrition Act which rewards and punishes officials and employees of the BoC and BIR who fulfill and fail to meet collection targets.
“The Lateral Attrition Law provides a provision on penalty if the agency fails to meet its revenue target, such as removal from office. I don’t think this had been effectively implemented under the previous administration,” Alvarez said in an interview.
He said the law should have been implemented with the continued budget deficit that budget Secretary Benjamin Diokno said may breach over two percent of the gross domestic product (GDP) this year.
“It seems they implement the law without the IRR. The IRR is taken for granted,” Alvarez told Finance Secretary Carlos Dominguez III, who vowed to provide an answer in two weeks.
Deputy Speaker and Batangas Rep. Raneo Abu joined Alvarez in finding ways on how concerned government officials could effectively implement tax collection strategies and arrest the growing collection shortages.
Abu said the House leadership will work on new proposed tax laws to generate revenues like imposing tax to soft drinks, excise tax, and others.
He admitted though that the BIR decision to reduce the collection target this year to a more realistic level from the original P2 trillion to P1.6 trillion or about a 20 percent cut was not surprising.
“There are other new measures which are being studied in Congress that will somehow lessen the impact of the said 20 percent revenue target cut, such as the soft drinks’ tax, the excise tax on oil, the review on sin tax [cigarette and alcoholic drinks], the tax on mining, the tax on non-essential goods, the excise tax on junk food, the road user’s tax, the review of the excise tax and registration fees of motor vehicles,” Abu stressed.
“BIR almost always misses their target. The 20 percent revenue cut is not surprising and I believe has been factored in when the National Government made the projection for the budget of next Fiscal year  so it should not affect the proposals to lower income tax rates,” Abu added.
During the Aquino administration, former Leyte Rep. Martin Romualdez, now president of the Philippine Constitution Association (PhilConsa), pressed the DoF to strictly implement the Lateral Attrition Law.
“It’s unfortunate that this good law has not been implemented. I hope the concerned department will enforce this to boost the performance of the Bureaus of Customs and Revenue,” Romualdez said.
“If they fall short of target revenue, the Attrition Law is there to impose sanctions and also provides incentives to the performers. That would have been a fair and transparent approach to ensure check and balance.”
Under the Attrition Law signed in 2005 by then President Gloria Macapagal Arroyo, now a three-term Pampanga lawmaker, officials and employees of revenue agencies who fall short of their collection targets by at least 7.5 percent would be dismissed from service.
The law also provides that those who go beyond expectations would be given incentives, which may include cash.
RA 9335 provides that if revenue collections exceed the target by 30 percent or below, the law guarantees that 15 percent of the excess will form part of a rewards fund.
It mandates the commissioners of the BIR and BoC to submit a regular report on the performance of the two agencies to a nine-member Revenue Performance Evaluation Board, which is chaired by the secretary of Finance.