Cabinet musical chairs?

A new landmark law took effect without the usual signing ceremony at Malacañang Palace. President Ferdinand “Bongbong” Marcos Jr. (PBBM) signed on Friday Republic Act (RA) 11976, also known as “Ease of Paying Taxes Act.” As announced by Malacañang, this new law is expected to further improve the government’s tax collection efforts as well as “protect the taxpayers’ rights through digitalization.”

Approved by the 19th Congress before they adjourned for the Christmas recess last month, the “Ease of Paying Taxes Act” was among the priority administration measures mentioned twice by PBBM during his State of the Nation Address, first in July 2022 and then again in July 2023.

These amendments to the National Internal Revenue Code of 1997 supposedly aim “to update the Philippine taxation system, adopt best practices and replace antiquated procedures,” according to Presidential Communications Office (PCO) Secretary Cheloy Garafil. A lawyer by profession, Garafil cited the newly signed Ease of Paying Taxes law supports PBBM’s “8-Point Socioeconomic Agenda through the collection of more taxes to enhance economic and social development.”

RA 11976 was crafted in such a way to modernize and increase the efficiency of tax administration, Garafil stressed.

In plain language, this should enable the government to capture as many taxpayers as possible in the tax net by streamlining the system that will reduce tax-shaving and evading paying taxes. The same law is supposed to strengthen taxpayer rights and minimize their burden to comply with mandated tax payments.

Three days after the Palace announcement of RA 11976, Commissioner Romeo Lumagui Jr. of the Bureau of Internal Revenue (BIR) issued an “Advisory” that his agency will “cease collecting the Annual Registration Fee (ARF) from business taxpayers” effective Jan. 22 this year in compliance with Ease of Paying Taxes Law. The BIR chief initiated this action even without the implementing rules and regulations (IRR) yet for RA 11976. “To all Concerned Taxpayers, Revenue Officials and Employees,” the BIR chief disclosed, business taxpayers are exempt from filing BIR Form No.0605 and paying P500 ARF on or before Jan. 31 every year.

Actually, RA 11976 takes effect 15 days after its publication in the Official Gazette, or in a newspaper of general circulation. As provided for under this law, the IRR shall be promulgated 90 days from its effectivity after the consultation of the Finance Secretary with the BIR and the private sector.

The BIR is the principal source of funding support of the annual budget of the national government. From January to October 2023, total tax collection amounted to P2.13 trillion, higher by 11.11 percent year on year, the BIR reported in a statement in November. For 2023, the BIR’s collection target was set at P2.64 trillion, higher by 12.99 percent or P303.50 billion, than the 2022 actual collection.

For the entire year of 2024, the BIR is assigned a total tax collection target of P3.046 trillion. This is a hefty increase from the previous year’s target. The new law should help the BIR to achieve this collection goal, barring pandemic-proportion events like we had in 2020.

As the head of the two major revenue collecting agencies of the government, namely, the BIR and the Bureau of Customs, Finance Secretary Benjamin Diokno has been mandated to make sure the provisions of RA 11976 should institute the intended administrative tax reforms. Specifically, these administrative reforms could help the BIR to plug loopholes and tax leakages from draining the government’s coffers of much needed revenues.

This should not be an added burden to the Finance Secretary, who was recently relieved as erstwhile head of PBBM’s Economic Development Group (EDG) Cluster of the Cabinet. In Executive Order (EO) No. 49 issued on Dec.15, 2023, PBBM created the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA). Three days later, PBBM appointed Frederick D. Go as the head of the newly created OSAPIEA.

Before he gave up his cushy job in the private sector, Go was formerly the president and chief executive officer of Robinsons Land Corporation. He concurrently served as the president of Universal Hotels and Resorts Inc. and also as the chairman of RL Commercial REIT Inc., Altus Property Ventures Inc. Go has served on the boards of various companies, including those of the Gokongwei Group, and has received numerous awards, the Palace announced. He is the nephew of the late Filipino-Chinese taipan John Gokongwei.

Go previously served pro bono as one of the members of PBBM’s Private Sector Advisory Council (PSAC). Go’s new portfolio not only accords him full Cabinet Secretary rank. The same EO has empowered him supervision over Diokno’s Department of Finance (DOF); the National Economic and Development Authority (NEDA) headed by Secretary Arsenio Balisacan; the Department of Budget and Management (DBM) of Secretary Amenah Pangandaman; the Department of Trade and Industry (DTI) of Secretary Alfredo Pascual.

Called for short as the SAPIEA, Go was designated as chairperson of EDG while the DOF and the NEDA secretaries shall serve as vice chairpersons. Also, EO 49 authorized the SAPIEA to supervise other agencies like the Philippine Economic Zone Authority, the Board of Investments (BOI) and the Securities and Exchange Commission (SEC).

Go’s office is not only tasked with ensuring that investment pledges are realized and make the Philippines “a top investment destination,” the Palace explained. The Philippines has been lagging behind its neighbors in terms of attracting foreign direct investments despite several laws passed by Congress to lure more foreign capital infusions and big business enterprises.

“Among the functions of the OSAPIEA head include assisting the President by providing him timely, relevant and strategic advice on economic matters and concerns, including, among others, inflation, food security and the increasing prices of key commodities,” it added.

In the latest Pulse Asia opinion survey done from Dec. 3 to 7 last year, controlling inflation had the highest disapproval rating of 73 percent for the PBBM administration, up from 56 percent in September survey.

Can the musical chairs of Cabinet members reverse the uptrend of disapproval rating? It is just the first 10 days 2024, let us wait and see.