Effective Revenue Collection: A Liberal's Legacy

By: HON. DANILO E. SUAREZ
Representative
Third District, Quezon

The nation owes to the Liberals of the 12^th and 13^th Congresses the present state of revenue collection in the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). During the 12^th Congress, Republic Act 9282 was enacted into law while the 13^th Congress gave birth to Republic Act No. 9335. The enactment of these two sensible and dynamic pieces of legislation came at a time when the government needed them most. As a result, the BIR has reached its target beginning the first quarter of 2005. In 2006, the BIR did the same feat and is headed towards a more effective tax collection effort. BOC, on the other hand, barely missed its goal in 2005 but its performance is a far cry from its dismal achievement in the previous years. In 2006, BOC boasts of exceeding the targets set by the Department of Finance.

Republic Act No. 9282 is a piece of legislation authored by a Liberal in the House of Representatives during the 12^th Congress, former Representative Aleta C. Suarez of the 3rd District, Quezon Province. After the bill was approved by the House of Representatives and the Senate, it was signed into law by President Gloria Macapagal-Arroyo on 30 March 2004. RA 9282 in effect amended RA 1125 by giving the Court of Tax Appeals criminal jurisdiction over tax and customs cases, increasing its membership, expanding its organizational set up and raising its level to that of the Court of Appeals. This law completely changed the rule in RA 1125 wherein the jurisdiction over criminal cases involving violations of the tax and customs laws is lodged with regular courts, while the civil aspect of these cases is with the Court of Tax Appeals – a set up which had resulted to needless delays in the final disposition of cases.

Under RA 9282, any decision or ruling of the Court of Tax appeals in the exercise of its exclusive appellate jurisdiction which does not involve question of law or legality of any tax imposition shall be final and executory. However, under different circumstances, any party adversely affected by any ruling, order or decision of the Court of Tax Appeals in the exercise of its exclusive and original jurisdiction, or in the exercise of its appellate jurisdiction involving legal issue or question of law may appeal therefrom to the Court of Appeals in accordance with the Rules of Court by filing with the said Court of Tax Appeals a notice of appeal and with the Court of Appeals a petition for review, within fifteen (15) days from the date he receives a notice of ruling, order or decision with the proviso that failure to appeal within the said period would render said ruling, order or decision final and executory.

Corollary to the reorganization of the Court of Tax Appeals is a provision providing for the automatic assumption of the incumbent Presiding Judge and Associate Judges to the positions of Presiding Justice and Associate Justices, respectively, without the need of new appointments.

With the jurisdiction over both the civil and criminal aspects of a tax case vested in one court, RA 9282 is expected to effectively enhance and maximize the development of jurisprudence and judicial precedence on tax matters which are of vital importance to revenue administration. The same may not be achieved if another court exercises criminal jurisdiction as in the previous set up. With the rich source of jurisprudence, the Court of Tax Appeals can easily rule on various matters pending with the CTA.

On the other hand, RA 9335, championed by another Liberal ( the author) and passed into law during the 13^th Congress, addresses the problem in revenue collection in the BIR and the BOC by devising a system of reward and punishment among the officials of these government agencies. Entitled “Attrition Act of 2005”, the law proposed a straightforward strategy to plug the massive losses in revenue due to under-collection by reforming the system of setting revenue target and then penalizing significant under-collection through attrition or rewarding those who exceed their targets.

Under the law, a Rewards and Incentives Fund is created to be sourced from the collection of the BIR and the BOC in the excess of their respective revenue targets of the year, as determined by the Development Budget and Coordinating Council (DBCC), in the following percentages:

Excess of Collection Over the Revenue Targets is 30% or below = Percent (%) of the Excess Collection to Accrue to the Fund is 15%

Excess of Collection Over the Revenue Targets More than 30% = Percent (%) of the Excess Collection to Accrue to the Fund is 15% of the first 30% plus 20% of the remaining excess.

To set the guidelines for the grant of incentive and for the implementation of the penalty, RA 9335 deemed it necessary to create the Revenue Performance Evaluation Board. With the creation of the Board, the expected abuse of authority or grave abuse of discretion in the implementation of said law would be corrected. In addition, affected employee is afforded procedural due process as he is given the right to explain himself before the Board and in case of adverse decision, he has the right to appeal the decision to the Civil Service Commission or the Office of the President, whichever is applicable.

The “Attrition Act of 2005” complements our anti-graft and corruption laws in two ways. On one hand, it enhances and facilitates the process of detecting and penalizing corruption by expanding the grounds for the removal from office of erring or incompetent officials in the BIR and the BOC. On the other hand, it removes the incentives for corruption. This it does by providing ample and legitimate rewards and incentives through a system that automatically allocates proportionate amounts of collections in excess of target for distribution to deserving employees and their agencies.

The Liberals have truly responded to the call of the changing times. Aware that taxes are always considered the lifeblood of the nation and their effective and efficient collection are necessary to sustain the multifarious activities of the government, the Liberals have become instrumental in crafting legislation to address these needs. With the two laws now in place, the thrust of the present administration to arrest the ballooning budget deficit through effective revenue collection is achievable. RA 9282 effectively answered the need for the speedy resolution of tax cases so that tax evaders with pending cases would be penalized and the corresponding taxes collected. RA 9335, on the other hand, addressed the corruption within the BIR and BOC through the institution of the innovative approach of reward for the achievers and dismissal for the under-achievers.

Taken from 'the Liberal', the official publication of the Liberal Party of the Philippines