Creation of new tax body pushed

Following an exposé on the lavish lifestyles of Bureau of Internal Revenue I(BIR) officials, President Arroyo has certified as urgent House Bill 5465,or the National Authority for Revenue Administration (NARA) bill, that seeks to create an independent and transparent tax collection agency to replace the graft-ridden BIR.

"I hereby certify to the necessity of the immediate enactment of HB 5465 to address the public emergency consisting of the urgent need to rein in the country’s fiscal deficit which has risen precipitously," President Arroyo said in a memorandum sent out to House Speaker Jose de Venecia Jr.

The government’s budget deficit hit an all-time high of P232 billion last year, surpassing the original ceiling of P130 billion by 64 percent. The record fiscal deficit was also 45 percent higher than the previous year’s P147-billion budget gap.

International credit rating agencies Standard & Poor’s and Fitch Ratings earlier downgraded its outlook on the Philippines to negative from stable mainly due to its poor fiscal management as seen in the government’s failure to keep the budget deficit within the prescribed ceilings.

President Arroyo also said there is an urgent need to "reverse the declining tax effort attributable primarily to weak tax administration, corruption, and institutional constraints in the Bureau of Internal Revenue."

The BIR’s tax effort slumped to a nine-year low of 9.92 percent in 2002, from10.68 percent the previous year. The tax effort refers to the total collection of the BIR against the country’s domestic output or the gross domestic product (GDP).

The NARA bill seeks to address institutional constraints at the BIR that led to massive revenue leakages at the country’s tax collection agency. The Department of Finance has estimated annual revenue losses due to corruption at the BIR at P242 billion.

The bill hopes to plug these leakages by increasing transparency and enhancing professionalism and accountability among revenue officials.