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TESTING THE SUAREZ FORMULA
The Philippine Star Congressman Danny Suarez is not your regular technocrat although he has been tagged more recently as the “tax reformer” of government today, having patiently nurtured through the two houses of Congress both the Lateral Attrition Law, and more recently, the Tax Amnesty Act of 2007. A successful businessman before he decided to enter into politics, Danny is now on his second cycle as representative of his province, having completed his first three three-year terms, then taking a three-year leave, before returning again as Congressman of Quezon's 3rd district. I remember him more fondly as a struggling working student taking a day job as warehouseman in the company where we both were employed, dashing after Focus In his almost 10 years in the legislature, Danny has remained utterly focused on a self-imposed mission to help solve the government's fiscal problem. Currently as chairman of the House's Oversight Committee, he brought with him to legislative sessions the insights he had learned while building up his businesses. Even if consensus building on both the attrition and tax amnesty laws took a lot of effort before they reached that point when all that was needed was the President's signature, Danny never waivered. The Lateral Attrition Law, for example, had to be re-filed in several Congresses. In fact, when it finally was in passable form, it was no longer Danny but his wife Alena who by then was already representing Quezon in the Lower House, who signed the bill. All throughout those years, Danny never lost focus and belief that the proposed law was going to help improve the mettle of all of government's collecting agencies. There still may be a few rough edges to the law's implementing rules and regulations that could be improved, i.e., the absence of an automatic provision in the national budget of the “reward” money for those who would have met their targets. The Bureau of Customs claims that it had surpassed by P2.2 billion its P190 billion collection target. Under the law, the BoC should receive the equivalent of 15 percent of the excess collection, but there was no budget appropriated for it. Perhaps had the booty been immediately available last year, or early this year, we would be seeing today a more reinvigorated Customs work force. The Lateral Attrition Law, by the way, mandates the giving of rewards to collection agencies that meet or surpass periodical revenue targets, while penalizing those who fail to meet the target either by demotion, reassignment, or dismissal. The law is in force now with only two of government's primary collection agencies – the BoC and the Bureau of Internal Revenue. In time, other revenue-generating units of the executive like the Land Transportation Office will eventually be included. A rare opportunity The Tax Amnesty Act, made into law early this year, also went through some gut-wrenching debates, although deliberations on the bill started only in 2004 after the current administration's economic planners had raised the alarm for government to swiftly act on its fiscal problem. Most of the concerns raised were about the morality of “rewarding” individuals and companies that had erred in declaring their true profitability. Legislated tax amnesties, though, if it is any consolation to the law's antagonists, have seldom been granted in the history of the BIR. The first was during the Marcos years, and the second – which reportedly was a failure – was during the term of Corazon Aquino. Proponents of tax amnesty see this as an opportunity for those who need to cleanse their accounts but have hesitated in the past because of the large tax assessments that most probably have even exponentially increased because of interest levies. After numerous roadshow presentations made by our finance people, we will soon know if the offered tax amnesty will indeed achieve its ambitious goal of raising P7 billion while at the same time providing BIR with an updated “clean” list of taxpayers. The implementing rules and regulations issued by the DoF last August 15 states the deadline for availing of the amnesty will be six months hence. That gives our errant taxpayers with enough time to consult their lawyers and accountants on how to correctly file to avail of the benefit. Based on their filed Statement of Assets, Liabilities and Networth, individuals and corporations will be assessed their tax dues as of But beware! Those found to falsify their SALN by 30 percent or more, will be subject to criminal raps and will have to face severe penalties. Waiting for results The current tax amnesty act is a dire expression of our government's inept record of going after errant taxpayers, now and in the past. This is a one-off opportunity for those who have managed to dodge tax liabilities to clear the past and come out clean. On the part of government revenue collectors, with a new and broader tax base post-amnesty and a “reward and punishment sword” hanging over their heads, they should now be able to pursue relentlessly future tax cheaters. Here's hoping that the “Suarez formula,” the broad acceptance of the tax amnesty combined with the strict and full implementation of the attrition law, will help achieve Cong. Danny Suarez's dream of a better fiscal position through more effective and broader-based tax collection system. 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