Taxing times seen frustrating Philippine reforms

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MANILA, July 12 (BSS/AFP) - The sacking of a tax collector has raised fears that corruption and unrealistic expectations may scupper government revenue targets, jeopardising the fiscal reform package in the Philippines.
That package had been winning President Gloria Arroyo plaudits from foreign investors and ratings agencies for turning around an economy long considered moribund and corrupt.
But that changed when Jose "Jojo" Bunag, head of the Bureau of Internal Revenue (BIR), was fired on June 20 after his agency fell short on first quarter collection targets by 10 billion pesos (218 million dollars). May figures, which accompanied the very public sacking of Bunag, showed poor revenue collections had led to a government deficit of 1.7 billion pesos, from a 12 billion surplus in April.
In his defence Bunag claimed government targets were too high while he also found support from politicians and government academics calling for reform of a system shrouded by a lack of transparency.
"Tax collection has always been a problem in this country. There has to be a clear, transparent system of collection. It is as simple as that." said Ben Diokno, an economist with the University of the Philippines.
Neal Cruz, a columnist writing in the Philippine Daily Inquirer, said: "No other revenue agency in the world adopts such target setting performance criteria, for the simple reason that it can never be accurate because of too many variables in the economy.
"If the BIR is not able to achieve the collection target, then it is assumed that its personnel must be corrupt and not collecting the correct taxes."
Following Bunag's removal, the government said it remains confident the BIR will reach its target of 730 billion pesos by the end of the year.
It is also planning to add a further 105 billion pesos from asset sales, which include offloading a 24 per cent stake in brewer San Miguel and a 60 per cent stake in Philippine National Oil Company-Energy Development Corp.