A Suggestion for Curbing Corruption: Change the Rules

Pahimakas
Jayson Edward B. San Juan

WE BLAME government mispriority for the decreasing support for education, health, and other social services. The government, it seems, is more enthusiastic in paying for its obligations to lending institutions than educating its students and treating its sick people.

Yet government remains in a tight situation. As government keeps incurring budget deficit annually, it has no choice but continue to borrow from multilateral institutions to finance its projects and programs.

There is a solution in the tightfix between lender and borrower, between the government and the people. A research conducted by an investment bank concluded that government loses around P380 billion annually in potential revenues. Budget and Management Secretary Emilia Boncodin said that if the government collects only even half of this amount, it could wipe out the budget deficit. When government operates without a budget shortfall, it no longer needs to borrow money from international lending institutions.

Thus, it is there is a need to improve the system of government revenue collection. Tax administration reform is an idea whose time has come.

Destruction for creation
There are two identified problems in corruption. One is the fertile ground with which corruption can thrive in the Bureau of Internal Revenue (BIR), the largest government revenue-collecting agency.

The BIR accounts for 80 percent of total government revenues. It is also perceived to be the most corrupt government agency. The Office of the Ombudsman annually ranks it as one of the most corrupt government agencies. Documented reports and studies also reveal that some BIR employees pocket millions of potential revenues that should be going to government coffers.

When Commissioner Rene Bañez resigned, he said that certain BIR employees purportedly connived to sabotage collection, resulting in a shortfall of P33 billion that widened the budget deficit by P133 billion.

Dr. Manolet Gonzales from the BIR transformation team said that politics over BIR operations and its vulnerability to political interests makes the BIR inutile in curbing corruption. He underscored that the agency's insulation from political horse-trading and a performance-based management will solve the corruption within the BIR.

Thus, a House measure proposes the abolition of the BIR to create an independent Internal Revenue Management Authority (IRMA). The new agency will be a quasi-government entity, similar to the Bangko Sentral. It will be headed by an Internal Revenue Board with four government appointees and three private sector representatives. This, according to the BIR transformation team, will minimize narrow political interests over the appointments of officers and tax collectors.

Moreover, IRMA will be free to hire personnel, and give compensation and incentives based on merit. The new agency can employ the best tax lawyers, accountants, and computer experts to make tax collection more efficient and convenient, without the limitations imposed by government-standardized wages.

A beast's maze
But transforming the BIR is only the tip of the iceberg. There is also the need to completely overhaul the Philippine tax system by simplifying and rationalizing tax rules. The present tax regime is a labyrinth where rules overlap and sometimes negate each other. This gives tax collectors wide discretion to interpret tax laws. In the end, taxpayers suffer the burden of paying off-the-books fees to avoid penalties.

Simplifying and rationalizing tax laws should free a lot of gibberish in the Philippine tax system, creating clear and easily understood tax rules for every taxpayer, and consequently reducing incidents of harassment and abuses committed by unscrupulous tax collectors.

This reform hits the very heart of the Philippine tax policy, as it changes the very rationale of the whole tax system. If the policy remains unchanged and the equilibrium within the system undisturbed, the same problem of corruption will continue to thrive even if the whole BIR is overhauled. Changing the rules will make the game more sensible, as players can easily identify their roles to play.

With the reforms in tax administration, observers say that the budget deficit will be slowly wiped out. Thus, the government will no longer need to borrow money to finance its projects. Consequently, government will have a bargaining chip to defer debt servicing.

With money freed from automatic appropriations, we will have a more legitimate and plausible reason to demand for more government subsidy for education, health, poverty alleviation, and other basic social services.

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Ang may-akda ay mas kilala sa tawag na SJ. Dati siyang manunulat sa Philippine Collegian at lider ng SAMASA Alliance sa Unibersidad ng Pilipinas.

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