Dominguez: Tax reforms needed to raise revenues

Pending the implementation of the planned reforms in the country’s tax infrastructure, the Duterte administration will pursue a new system of taxation, since achieving efficiency in collecting revenues similar to the level of the country’s neighbors can’t be achieved under the country’s outdated tax schedule, Finance Secretary Carlos Dominguez III said in emphasizing the need for tax reforms.

He also revealed that he has created an anti-red tape team in his department to ensure fast and efficient public service and address graft and corruption.

He said he appointed Finance Undersecretary Gil Beltran to head the team, which will recommend measures to rationalize procedures and reengineer the current transaction system.

Before a recent business forum, Dominguez said the present tax system “could hardly be called sustainable.”

“It is not progressive. It relies on collecting from less and less people. We cannot meet the net tax threshold of our neighbors using the system in place,” Dominguez said.

According to him, much more effort must be exerted toward making tax payment a truly satisfying and simplified experience.

“We will have to make tax payments more accessible in theory and in practice,” he said without elaborating.

He also bewailed the lack of efficiency in the main collection agencies— the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), noting that each year, 98.47 percent of tax collections comes from voluntary tax compliance; the rest comes from audit and enforcement activities by the revenue agencies.

“This is not a very encouraging figure, especially when set against the actual number of taxpayers in this country,” he said.

Dominguez also revealed that his department plans to expand the large taxpayer service and improve taxpayer segmentation “to get a better handle on our revenue base.”

“As things stand, only 2,320 companies account for our revenue base. This could not possibly be accurate. Yet, we have subsisted on that small number for many years,” he said. “I am now asking the BIR to look at the numbers with fresh eyes. There is a lot more that these numbers conceal than they betray.”

The anti-red tape team will required to submit quarterly reports at the start of every given period and make full use of modern communication technologies, including social media, to improve the DOF’s services.

“The department is committed to streamlining the delivery of government services and intends to pursue this by designating employees and officials specifically for this purpose,” Dominguez said.

Aside from Beltran, the other members of the DOF anti-red tape team are the members of the agency’s taskforce on Citizen’s Charter, plus a representative from each of the attached agencies’ Citizen’s Charter group.

Dominguez issued Department Order 38-2016 on July 18 to create the anti-red tape body.

These measures are in line with Republic Act (RA) 9485, otherwise known as the Anti-Red Tape Act of 2007, and covers not just the DOF, but all attached agencies, such as the BIR and the BOC, Dominguez said.

In his first Cabinet meeting on June 30, President Duterte directed all department heads to cut red tape in their agencies and fast-track the delivery of services by cutting application processes.

LUIS LEONCIO