On the weekend before the April 15 tax return deadline, the Bureau of Internal Revenue (BIR) took an unusual step.
On top of publishing the usual list of the Top 500 corporate and individual taxpayers, it also published lists of top taxpayers per revenue region all over the country.
More than 120 lists of top taxpayers from more than 120 revenue district offices were uploaded to the BIR’s website with the intention not so much to praise the people on the list but to shame those who were not listed.
“By law, we have to publish the top taxpayers’ list every year, but this practice only captures the data from the largest taxpayers, and they are mainly from Metro Manila,” Revenue Commissioner Kim Jacinto-Henares told the Inquirer.
Who are paying
By publishing taxpayer lists by the region, the BIR hopes to give people ideas as to who in the country are the most faithful in settling their tax obligations.
And Henares hopes publishing the lists will serve as a disincentive to smaller cases of tax evasion that may be happening off the radar—amounts that, when added up, come up to billions of pesos in uncollected taxes.
In Cebu—the country’s second-wealthiest metropolitan area—for example, the largest taxpayer in the restaurant category paid P382,158.41 in taxes for 2012. One beauty treatment clinic paid taxes worth P161,464.64, while one pawnshop paid P20,145.05.
“What we’re saying to people is: ‘You know who the rich people in your cities, in your communities, are. If they’re not on these lists, you have to wonder why,’” Henares said. “The lists also serve as guides for our regional offices.”
From all indications, the BIR’s name and shame campaign—three years after the reactivation by the Aquino administration of the Run after Tax Evaders campaign—is working wonders for the government’s revenue collection efforts.
To be sure, the BIR continues to miss its annual collection targets. But data gathered by the Inquirer show that the BIR has been progressively reducing its misses since President Aquino assumed office in 2010.
In 2009, the interagency Development Budget Coordination Committee (DBCC) gave the BIR a collection target of P798.4 billion. The BIR was able to collect only P750.2 billion, missing the goal by 6.03 percent.
In 2010—the first half of which was under then President Gloria Macapagal-Arroyo and the second half under President Aquino—the DBCC assigned an P860.4 billion target to BIR. The revenue bureau collected P822.6 billion, missing the mark by 4.4 percent.
By 2011, the first full year of the Aquino administration, the gap between the BIR’s collection target and the actual collections had narrowed to 1.69 percent (goal of P940 billion against collections of P924.1 billion).
Last year, the BIR narrowly missed its goal by just 0.77 percent. Only P8.2 billion in uncollected revenues separated its actual collections of P1.057 trillion and its assigned target of P1.066 trillion. It was the narrowest gap and the best performance by the BIR since goal-setting started.
More important, the days of large-scale corporate tax evasion seem to be behind the BIR now, especially with the growth in the payments of large corporations approximating the growth rate of the Philippine economy, an indication that companies are, more or less, paying what they should to the government.
“Last year, the nominal growth rate of the gross domestic product was at 8.6 percent,” Henares said. “But our collections grew by over 14 percent. The difference between those numbers is what is attributable to better tax administration.”
Outside the BIR’s Large Taxpayers’ Service (which lumps together corporations that supply 62 percent of the government’s revenues), payments by smaller taxpayers to regional offices are growing by an average of 20 percent annually, a sure sign, according to Henares, that businessmen are more confident that their taxes will be spent wisely.
But Henares remains unpopular with businessmen, including bankers, company presidents and even the auditing and accounting communities. Several of them who were contacted by the Inquirer declined to speak about her policies on the record, but were nearly unanimous in complaining about her “aggressive” tax policies, often enforced with little consultation with them.
The unpopularity of Henares and the BIR will rise further with the measures currently being readied to improve tax collections. These include cross-checking the BIR’s taxpayer database with the lists held by the Professional Regulatory Commission, the Social Security System and other organizations whose rosters might yield clues to who else are evading taxes.
So far, the BIR’s style seems to be working. In both peso terms and percentage of economic output (the so-called tax effort), 2012 was the best year in the history of the revenue bureau, something Henares does not dwell on.
“There is a marked improvement, but there’s room for more,” she said. “Taxpayers are responding, but not as much as I want them to. It’s not yet at the level that would allow me to say we’re successful.”