Implementation of Lateral Attrition Law weak – study

The imposition of sanctions on officials of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) who failed to meet their revenue targets have been slow.

According to a congressional committee report entitled “Staying the Course,” the government’s implementation of the Lateral Attrition Act of 2005 has been weak.

“Recommendations to the Revenue Performance Evaluation Board (RPEB) on the sanctions to be given to the officers of the BIR and BOC who failed to meet their targets by 7.5 percent came at a sluggish pace, despite the amount of time given for such officers to justify their shortfall to the RPEB,” the committee report said.

The Lateral Attrition Law provides for a system of reward and punishment for BOC and BIR officials and employees depending on their performance. Those who fall short of their collection targets by at least 7.5 percent would be dismissed from service while those who go beyond expectations would be given incentives which may include cash.

The committee thus urged the BIR and BOC commissioners, as well as their respective officers, to fully implement the law “instead of looking for loopholes to circumvent the penalties provided therein.”

In the report, the committee stressed that the 7.5 percent threshold and the penalties for falling below that threshold could be an effective tool if properly implemented.

It said that the threshold provides a more effective and quantifiable method of penalizing inefficient, and possible corrupt, revenue officials.

 “The rewards and incentives provided by the Attrition Act should also serve as an encouragement for the said officials to achieve or even exceed their goals for the given year, which has been the intention of the law from the beginning,” the committee said in its report.

It also noted the need to exempt the BIR and BOC employees from the Salary Standardization Act, saying that this would help discourage corruption within the two agencies and pave the way for more competent staff to man the two offices.

The government should put more effort into weeding out these corrupt officials if it intends to generate more revenue through more efficient revenue collections, the committee also said in its report.

The two agencies are under heavy pressure to meet revenue targets. The BOC is tasked to collect P254 billion this year while the BIR is tasked to generate P845 billion.