(UPDATE) Palace accepts resignation of BIR chief Esquivias
abs-cbnNEWS.com | 11/02/2009 12:24 AM
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MANILA - Malacañang on Monday has accepted the resignation of Sixto Esquivias IV as Internal Revenue Commissioner.
Press Secretary Cerge Remonde made the announcement after reports that Esquivias resigned late last week, less than a year from taking over the top post in an agency bearing the brunt of raising money for a fiscally challenged government.
Remonde said his replacement in the bureau of Internal Revenue would be announced Tuesday.
Finance Secretary Margarito Teves confirmed on Sunday the resignation of Esquivias from an agency more known for missing its collection goals than meeting them.
Teves said in a text message that Esquivias tendered his resignation on Friday, October 30. He declined to reveal the reason for the departure.
News started to circulate at the main office of the Bureau of Internal Revenue (BIR) in Quezon City late Friday that Esquivias had resigned.
“His staff members have confirmed to us that he [Esquivias] had already resigned. But we don’t know why,” BIR Manila regional director Arnel Guballa said in a telephone interview.
Guballa, however, denied reports received by the BusinessMirror that Esquivias and his boss, Finance Secretary Teves, had a heated argument last Thursday during the BIR command conference, which led to his resignation. The conference is a monthly BIR activity to discuss issues such as the collection target.
“There’s nothing like that, everything is cordial with us,” Guballa said.
‘Hot seat’ close to elections
The BIR’s newly minted Senior Deputy Commissioner Joel Tan-Torres is being bruited about as a shoo-in to take over the top BIR post, with veteran BIR watchers saying it would be hard to persuade an outsider to take the “hot seat” so close to elections, when most politicians are inclined to defer tax reforms and take a more populist stance. Besides, the BIR still has a wide revenue hurdle to fill, as the Department of Finance recently reported it had nearly reached the full-year deficit target in just nine months.
Tan-Torres, however, declined to say he will be the one to replace Esquivias, as there is no confirmation yet about the latter’s resignation.
“There’s nothing to confirm yet because we have not received a confirmation from the secretary [Teves] or Esquivias himself. For now, it’s business as usual for us in the BIR,” Tan-Torres told the BusinessMirror.
Persons close to Esquivias, however, said the commissioner has not been attending meetings with the private sector-led Tax Management Association of the Philippines (TMAP) to discuss some of the tax reforms that he himself has proposed.
Instead, it was Tan-Torres who was appearing on Esquivias’s behalf.
Last week, for instance, it was Tan-Torres who led the media briefing on the income-tax deductions on claims for damage from typhoons Ondoy and Pepeng.
The TMAP had led other business and industry associations in defending the BIR chief’s post from perceived questionable encroachments by the Presidential Adviser on Revenue Enhancement (PARE), after Malacañang issued an order giving the PARE tasks that were viewed as tantamount to duplicating the powers of the BIR chief under the National Internal Revenue Code.
Shortfalls from target
Esquivias, who came from the private sector but started his career as an examiner in the BIR, will be the third commissioner to resign in a span of three years. His predecessors, Jose Mario Buñag and Lilian Hefti, also resigned after reported discussions with the DOF on the agency’s failure to reach its collection target.
Reached for confirmation on Esquivias’s resignation, Finance Undersecretary Gil Beltran said, “I don’t know about it, but it is common among BIR people to resign when they don’t hit their assigned targets.”
Teves put Esquivias at the helm of the BIR to replace then BIR chief Lilian Hefti, an agency insider like her predecessor, and leaked the information to the press just before he left for Washington DC to attend the Annual Meetings of the International Monetary Fund/World Bank Group at that time.
But while Esquivias and Hefti were both BIR insiders who rose from the ranks before eventually taking its helm, both also failed to deliver the revenue numbers that Teves wanted to see all this time.
Esquivias failed to deliver P39.2 billion worth of revenues he was tasked to collect in the first nine months, mostly because economic activities have been markedly down as a result of the global economic slump and because of the legislature’s penchant for extended tax relief measures on favored sectors as individual income earners, for instance.
The decision reducing the corporate income tax to just 30 percent of gross income starting January this year from 35 percent also took its toll on revenue flows that could not be boosted enough by Esquivias’s tax-enhancement programs as Oplan Kandado and the third-party information campaign designed to uncover tax cheats.
Certainty of failure
BIR, where two-thirds of the revenues of the national government comes from, earlier said that it is already sure it will not attain its P798.5-billion collection goal for the year, as its shortfall for the nine-month period already hit P39 billion.
Aside from not hitting its collection goal, Esquivias was also on the hot seat just last month after Sen. Miriam Defensor Santiago criticized the commissioner for not turning over the Large Taxpayer Service to the PARE, which is headed by the senator’s husband, lawyer Narciso “Jun” Santiago. About 60 percent of BIR’s revenues come from the Large Taxpayer Service.
Reforms under Esquivias
IN his year-long stint in BIR, Esquivias has already started some changes in the agency, such as shuffling personnel all over the country months after he took over, streamlining of the documents that were submitted by the taxpayers on a regular basis, among others.
He also revived previous BIR programs such as the Oplan Kandado, or the closure of establishments found to have misdeclared their sales and value- added tax remittances to the government by more than 30 percent.
Esquivias earlier said that he intended to instill fear among taxpayers through the closure program and the agency will do away with several tax amnesty programs that erode future revenues.
“It creates a [mindset among] taxpayers who will think, ‘why should we declare true correct sales and revenues when we know that later on there will be administrative or legal amnesty, so why should we declare the true picture of our finances?’,” he said in an interview early this year.
Last week, the BIR was given the green light by the interagency Investment Coordination Committee (ICC) under the Neda Board to negotiate with SICPA Product Security S.A. for a tax enhancement program for cigarettes.
The National Economic and Development Authority said, “The proposal aims to enhance excise tax collection for all locally manufactured cigarettes sold in the domestic market and to reduce illicit trade in the country using an integrated technology solution.”
The project will be put through a Swiss challenge, which requires a government agency that has received an unsolicited bid for a project to publish the bid and invite other prospective private proponents in the market to match or exceed it.
The project involves tracking, tracing, and monitoring the environment of cigarette products through the use of a secure automated system. The project will allow the production of tamper-proof strip stamps in every pack of locally manufactured cigarette for purposes of efficient excise tax collection, monitoring, and field inspection. VG Cabuag & Jun Vallecera, Business Mirror with a report from Willard Cheng, ABS-CBN News
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