CHAPTER 7  FISCAL STRENGTH/FINANCIAL SECTOR

   The fiscal position of the Philippine Government depends mostly on the revenue taxes generated by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). Of the two agencies, the BIR is the biggest revenue earner for the government.  The Local Government Units (LGUs) also helped in the generation of local revenue to augment their respective financial resources for their priority programs and projects.

   For CY 2006, the BIR was instructed to collect at least PhP765 billion.  Of this national target, Region 5 (Revenue District Office #10) had a goal collection of PhP2.825 billion or.37 percent of the national target.        

Resource Generation Performance

 

   In terms of performance, Revenue District 10 (Region 5) had a total collection of PhP2.907 billion as against the target of PhP2.825 billion, or 103 percent collection rate. It is 16 percent higher than the 2005 collection of PhP2.504 billion. (Table 7.1).

 

   By revenue district, the top three revenue performing districts in terms of collection vis-a-vis targets include Daet, Camarines Norte with PhP348.750 million, Virac, Catanduanes   with PhP125.546 million and Masbate City with PhP220.269 million. (Table 1).

 

   By type of tax, the first three highest collections were income tax with a total amount of PhP1.847 billion, an 8.66 percent increase over the 2005 collection of PhP1.699 billion; followed by value added tax amounting to PhP803.717 million, an increase of 38.76 percent over the 2005 actual of PhP579.219 million and other percentage tax with a total collection of PhP128.325 million as against the 2005 collection of PhP89.526 million, 43.34 percent increase. (Table 2).   Collection efficiency was 103 percent.

 

   The following programs were implemented which contributed to an increase in the collection for the year under review.  Among these are:

• The issuance of BIR Regulation No. 15-2006 that may have led to the dropping of court cases against tax delinquencies and a reduction in their liabilities.  This is another step of reducing the Bureau's accounts receivables and pending assessments. This regulation specifies that cases against tax delinquents, cases with the Department of Justice, the Court of Appeals, the Court of Tax Appeals and the Supreme Court may be dropped if the taxpayers agree to enter into a compromise with the BIR. This regulation will only require the basic tax, waiving all penalty fees including interests and surcharges. This policy is a shift from running after tax evaders and taking them to court.

• The Tax Computerization Program established an integrated tax system designed to provide a standard processing framework for tax collection and administration.  This contributed to the attainment of meeting its goals in increasing revenue collections, proving taxpayer service, promoting better taxpayer compliance and improving operational efficiency and transparency.  One of its advantages to the revenue district offices is it supports taxpayer transactions, tax collection accounting, tax compliance and management and decision support.

• Taxpayer profiling using NOMIS process was introduced to detect the non-registrants and those using invalid Tax Identification Numbers (TINs). Its aim is to maximize the use of external (third party) information and internal information, and ensure comprehensive processing of specific taxpayer/tax type, and donors and estate taxes.

• As incentives to the buying public, “Premyo sa Resibo” project was launched.  This is a joint project of the BIR and Phil Amusement & Gaming Corporation (PAGCor) to encourage buyers to request official receipts every time they purchase goods and services.  This has helped the BIR validate the business establishments in line with the Tax Verification Drive Program.

• Technology has contributed to the fast tracking and facilitation of cash transactions without experiencing the hassle of going to the area.  BIR has introduced the “G-CASH PAYBIR” project.  This was initiated to support tax collection drive by paying their tax of PhP10,000.00 and below by simple text messaging.  This was forged in partnership with Land Bank of the Philippines (LBP) as the accredited agent bank and Globe Telecom acting as taxpayer agent.  Other types of taxes covered by this program are the annual income tax returns for individuals earning purely compensation income, annual income tax return for self-employed, professionals, estates and trusts, second installment of income tax and registration fees, fines and penalties under tax compliance verification drive/tax mapping and documentary stamp tax/declaration/returns.

• The Tax Compliance Verification Drive facilitated the inspection of business   establishments to verify compliance with registration, invoicing and bookkeeping requirements under existing internal revenue laws, rules and regulations. As a result of this drive, some apprehensions were made on failure to register, failure to issue duly registered receipts/invoices and unauthorized cash registers.

• The proposed attrition law of the agency provides employees with low collection will be separated from the office if they fail to collect the set target for a given year.  

   For locally generated taxes by the local government units, collection of real property taxes and other business fees showed positive as well as negative performance on collections.  For the provinces, the top three performers for real property tax collection were Camarines Sur, Sorsogon and Masbate.  For the cities, the top three performers were the cities of Masbate, Legazpi and Ligao.  (Table 7.3).  Taking from the locally generated income vis-a-vis the Internal Revenue Allotment (IRA), the figures show that LGUs are still dependent on the aid from the national government. For the cities, the IRA dependency ranges from 64 percent to 88 percent which means that the cities are exerting efforts to generate more income to finance their priority projects.  For the provinces, the IRA dependency ranges from 79 percent to 97 percent.  Income generating capacities of LGUs need to be strengthened as additional resources are needed for their development of programs and projects. (Table 4).

 

Expenditure Reforms

 

   Revenue Memorandum Circular No. 2006-05 was issued by the Chairman of the Commission on Audit dated July 13, 2006 amending Item 7.1 of COA Circular No. 97-002 on the Granting of Utilization and Liquidation of Cash Advances. This circular states that accountable officers whose total cash accountability is not less than PhP5,000.00 shall be bonded and the amount of the bond shall depend on the  total accountability of the officer as fixed by the Head of the Agency.  An official who has both money and property accountabilities shall be bonded only once to cover both accountabilities, but the amount of bond shall be in accordance with the schedule issued by the Bureau of Treasury.

 

   As part of decentralization, five regional line agencies and eight State Universities and Colleges (SUCs) continued receiving their allotment from the DBM Regional Office 5.  These agencies are: DPWH, DepEd, TESDA, DOH & CHED.   The eight SUCs are: Bicol University (BU), Camarines Norte State College (CNSC), Catanduanes State College (CSC), Camarines Sur State Agricultural Colleges (CSSAC), Camarines Sur Polytechnic Colleges (CSPC), Partido State University (PSU),  Sorsogon State College (SSC) & DEBESMSCAT.

 

   The desire to decentralize the budget release of other agencies did not materialize for the period under review.

Table 1.  Comparative Tax Revenue  Collections by Revenue District, 2005-2006:
Bicol Region (in million pesos)

                 Source: BIR Revenue District #10

Table 2 Comparative Revenue Collection by Type of Tax, 2005-2006
Bicol Region (in million pesos)

 Source:  LGUs       

                 Note: Figures are for validation by LGUs.

Table 4. Real Property Tax Collection by Province, CY 2005-200: Bicol Region
(in thousand pesos)