The departments of finance (DOF) and justice (DOJ) would work on speeding up the resolution of the 635 pending tax and smuggling cases amounting to a combined P103 billion in collectibles and review the incentive program that is costing Government at least P144 billion in tax perks and holidays to businesses.

Finance Secretary Carlos Dominguez III today said at a business forum in Bonifacio Global City (BGC) that the new government is at the same time raising public spending on human and physical capital so it could “deliver a bigger bang per buck” in sync with President Duterte’s electoral mandate to bring progress to all Filipinos amid the country’s resurgent economy.

To generate enough funds for such priority programs, he said at the 1st BusinessWorld Economic Forum that the DOF would overhaul the collection systems at the Bureaus of Internal Revenue (BIR) and of Customs (BOC), and aim to eliminate misconduct in these two agencies so notorious for corruption.

Dominguez reiterated the Duterte administration’s openness to unsolicited proposals on big-ticket infrastructure projects from the private sector, and assured the forum participants the approval processes for these ventures would be speeded up and kept transparent always to guarantee a level playing field for interested proponents and bidders.

He announced in the same event that he has picked holdover Undersecretary Gil Beltran to be the “anti-red tape czar” in charge of speeding up processes at the Department of Finance (DOF) and its attached agencies, in keeping with President Duterte’s very first directive for all government offices to provide hassle-free frontline services to the public.

“I will be appointing shortly Undersecretary Gil Beltran to be the Anti-Red Tape Czar,” Dominguez said of Beltran, who is the undersecretary for policy development management and concurrent chief economist at the DOF. “His (Beltran) role will be to dramatically reduce the number of steps and documentary requirements in transacting business with the DOF and all attached bureaus.”

“We will work closely with the DOJ to speed up resolution of 635 pending tax and smuggling cases, amounting to P103 billion in collectibles,” said Dominguez at the BusinessWorld forum held at the Shangri-La at The Fort hotel in BGC, Taguig City.

“It will be a sad commentary on our state of affairs if RATE and RATS have resulted in only five convictions for tax evasion and two convictions for smuggling,” he said, in reference to the BIR’s Run Against Tax Evaders program and the BOC’s Run After The Smugglers program.

Also, ‘this administration is committed to rationalizing tax incentives,” he said. ‘Government provides at least P144 billion in income tax perks and tax holidays. A truly serious study needs to be done about the relevance of many of those tax perks.”

“Fortunately, the previous Congress passed the TIMTA (Tax Incentives Management and Transparency Act) that seeks precisely to comprehensively review our tax incentives regime,” he said.

“With the data now being generated,” he said, “we should be able to have a fuller view of the real costs and benefits of this program. This will enable better review of our options moving ahead.”

“Let me declare, as a matter of policy, that this government is open to unsolicited proposals. Anyone out there who has a bright idea should come out and propose. Government has no monopoly over bright ideas,” he said.

In the case of the approval process for PPP and similar big-ticket items, he said, “We could go for ‘combo’ options. The financing could be shared with government or the private partner can undertake it himself. There should by no hard and fast rule.”

Dominguez said that, “Among the things we aspire for in the short term are: revising the procurement law to simplify and streamline the process; simplifying the permit requirements for infrastructure projects; creating a prioritization list and delineating delivery responsibilities between national and local projects; and, improving the absorptive capacity of key government agencies through better planning and project execution.”

“Much of what I outlined here is about delivering a bigger bang per buck,” he said. “We will judiciously husband state resources entrusted to us. We cannot possibly understate the importance of maintaining transparency in all our dealings.”

Dominguez said, “What we plan to do is to improve the efficiency of delivering basic services and infrastructure to benefit our communities. To accomplish this, we will need to cut redundancy in our procedures.”

“Last May, our voters chose overwhelmingly to cut the tax rates. This is a clear political decision. We intend to abide by it, not only because it makes political sense but also because it makes economic sense,” he said.

For the finance secretary, “This high tax rate system we maintained was actually counter-productive. We actually collected less taxes the longer the regime was maintained. No amount of public shaming could reverse this. The higher the tax barrier, the more conducive it becomes to evade tax due.”

“I am asking the BIR to look at the numbers with fresh eyes. There is a lot more these numbers conceal than they betray,” he said.

“By the way, the BIR scrapped the notorious letters of authority effective last week,” he said. “These letters were, in the main, used for shakedowns.”

As for the customs bureau, he said, “I proposed to the BOC that we try out new processes in ports outside Manila. If the processes work, we can apply them in the more crowded Port of Manila.”

“We might also adopt random audit of shipments. If no defects are found in the random audits, the traders may be exempt from audit for three years,” he said.

For our people to all the more benefit from the country’s high growth, Dominguez said that hefty cuts in corporate and personal income taxes are in the offing, in order to further stimulate businesses and let Filipinos have more money to spend on their families’ needs and still have enough left to save for their future expenses.

He said “the new government will judiciously use the budget to deliver services to our people. We are looking towards increasing our deficit to about 3 percent of GDP to finance urgently needed infrastructure.”

At the BIR, Dominguez said its new leadership would expand its electronic filing saturation from the current baseline of 62.5 percent (representing 22 million returns) in 2015 to a much higher figure this year and onwards.

“We are also looking into expanding the large taxpayer service and improving taxpayer segmentation to get a better handle on our revenue base,” he said. “As things stand, only 2,320 companies account for half of our revenue base. This could not possibly be accurate.”

At the BOC, meanwhile, he said the new leadership there would rationalize the import permit requirements.

“At the moment, about 50 regulators issue one sort of permit or another,” he said. “The excessive requirements impede the flow of trade and unnecessarily burden business operations. We will listen closely to the inputs from businessmen as we craft the rules and regulations of the Customs Modernization and Tariff Act (CMTA).”

Dominguez said the DOF is also exploring ways to improve the organizational capacities of these two major revenue agencies.

“Among the measures being studied are exemptions from the salary standardization law, increased fiscal autonomy, relaxing strict bank secrecy laws and making tax evasion a predicate crime to money laundering,” he said.

“While we ease taxpayer compliance requirements, we are as committed as ever to improving enforcement,” he said. “The directions from the President are clear: we will have zero-tolerance for corruption.”

As for tax cuts, Dominguez said, “The decision to trim both income and corporate tax rates is consistent with our goal to be a more competitive economy in the region.”

“The country cannot continue to be handicapped by high tax rates, only because we have gotten used to them,” he said. “There is a norm of efficiency to be observed.”

Dominguez pointed out that the past administration’s high tax rate system was actually “counter-productive,” adding that, “We actually collected less taxes the longer the regime was maintained. No amount of public shaming could reverse this. The higher the tax barrier, the more conducive it becomes to evade tax due.”

He said the present tax system could neither be called sustainable nor progressive because it “relies on collecting from less and less people. We cannot meet the net tax threshold of our neighbors using the present system.”

Said Dominguez: “Each year, 98.47 percent of tax collections come from voluntary tax compliance. Only about three percent to five percent come from audit and enforcement activities by the revenue agency. This is not a very encouraging figure, especially when set against the actual number of taxpayers in this country.”

“Much more effort will have to be exerted towards making tax payment a truly satisfying and simplified experience,” he said. “We will have to make tax payments more accessible in theory and in practice.”

The DOF chief said his office would “accelerate the RATE-RATS-RIPS anti-corruption programs.”

RIPS stands for the Revenue Integrity Protection Services program of the DOF.

Dominguez concluded that that while the new government fully intends to benefit our consumers with a more generous tax rates system, “we will work doubly hard to plug whatever loophole there might be in out tax system.”

“Doing so will create a fairer and more just fiscal regime for our people,” he added.