MANILA, Philippines—Finance Secretary Margarito Teves said he had given the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) until the end of September to submit a final list of underperforming revenue collectors who should be dismissed from service.

Teves, who also heads the Revenue Evaluation Performance Board (RPEB), an interagency body tasked with enforcing penalties and giving rewards under the lateral attrition law, said he recently met with top officials of the BIR and the BoC and directed them to fast-track the ongoing review of their 2007 collection performance to identify the people responsible for their shortfalls last year.

“I told them I needed the results of their respective evaluation on or before Sept. 30,” he said.

Teves’ statement followed the release of an assessment report by the House of Representatives oversight committee headed by Rep. Danilo Suarez that criticized revenue agencies for so far failing to enforce the penalties under the lateral attrition law. Read story

The committee said this could be interpreted as lack of seriousness of the administration of President Gloria Macapagal-Arroyo in fighting corruption and improving the government’s revenue collection.

The lateral attrition law, enacted in 2005, provides for rewards to overperforming employees of the BIR and the BoC and penalties on underperformers. Those who fall short of their goals by at least 7.5 percent are to be dismissed from service, and the others face reassignment.

In 2007, both the BIR and the BoC fell short of their goals. The BIR collected about P711 billion worth of taxes, compared with its target of P765.9 billion. The BoC turned in P213 billion as against its goal of P220.8 billion.

Until now, however, the BIR and the BoC have yet to formally submit lists of people for attrition. The BIR has drafted its list but has not officially given the RPEB names of persons recommended for dismissal.

Inefficiencies in collecting taxes and duties and alleged corruption were blamed for the shortfall of the BIR and the BoC.

The BoC argued earlier that it missed its target last year as a result of unrealized macroeconomic assumptions. For instance, it said, the peso was much stronger than assumed when its goal for 2007 was set.

As a stronger peso makes imported goods cheaper in peso terms, it reduces the base for computing import duties and taxes. The peso was assumed to average 42-45 to the dollar last year but it strengthened to record-highs and breached the 40-per-dollar level.

The BIR blamed its shortfall on low inflation, which adversely affects the collection of value-added tax, and on low interest rates, which led to lower collection of tax on income from bank deposits and debt securities.

Teves said the RPEB would take into account unrealized macroeconomic assumptions and efficiency of collection performance in deciding whether a revenue collector should be penalized or not. With editing by INQUIRER.net