Press Release
July 10, 2008

CUSTOMS COLLECTION IN '06 BLOATED BY TEF
Escudero says BOC exploited government's cashless revenue therefore it cannot claim rewards under the lateral attrition law

Advances from corporate taxpayers may have nudged up the revenue haul of the Bureau of Customs in 2006 - and thus allowed its personnel to claim a half-a-billion-peso bonus under the Lateral Attrition Law, but it was government's own tax payments which amplified the Custom's P198.1 billion tax take that year.

"The tipping point may have been provided by tax payments advanced by companies but the major push was given by the government, through the duties and taxes it paid for its own imports, mostly rice, therefore it is not covered by the lateral attrition law" Sen. Chiz Escudero today said.

Of the BoC's P198.1 billion collection in 2006, P20.6 billion came from the Tax Expenditure Fund (TEF), a "non-cash transaction that simply records in the books that duties arising from government imports have been settled," he said

Escudero, Chairman of the Senate Committee on Ways and Means said TEF is "the revenue equivalent of steroids" because it bloats tax collections. "And like any steroid, it foists a culture of laziness on the one using it."

Referring to BoC's 2006 performance, Escudero said the "the tip of the iceberg was tax advances but the unseen mass below was the TEF".

He said if the TEF was deducted from Customs' 2006 take - granted that it all went to the BoC - then its actual collection would have been only P177.5 billion, way, way below its P195.9 billion target."

Escudero blamed the Revenue Performance Evaluation Board (RPEB), the multi agency body which reviewed and approved the BoC's request for a P537 million cash incentive - equivalent to 15 percent of the surplus as allowed under the Lateral Attrition Law - as the claim rests on faulty grounds.

"Non-cash collections should not have been included by the RPEB in computing the incentives", Escudero said. RPEB is composed of the Finance and Budget departments, NEDA, and the BoC, which Republic Act 9335 created.

If the TEF is computed then it would legalize the "bizarre situation" in which "TEF released by the Bureau of Treasury as expenditure is received by it in a blink of an eye as revenue collection, "he said.

Escudero said the BOC is making a moro-moro out of their collection output, taking money from the left pocket of the government and putting it in its right pocket so it can boast that it is spending more for the people and collecting more taxes. "This should be stopped", he said.

The opposition senator said TEF should be written off from both the expenditure and revenue columns of the fiscal report card "as it is a mutually canceling exercise. It is classic dagdag-bawas - bawas sa expenditure, dagdag sa collection."

He said the addiction of the government to TEF shows the rise in TEF usage from P7 billion in 2004, to P20.4 billion in 2005, to P20.6 billion in 2006, to P30.1 billion last year.

In the first five months of the year, TEF drawdowns are already on the P20 billion ranges, mirroring the sharp rise in government rice importation.

He said both BoC and BIR collections, like Meralco bills, should be unbundled, to show how much of it is in TEF and how much in advance tax payments."

Escudero further hinted that BoC "might have gone overboard" in invoking a Marcos-era law, PD 1853, and the 1983 Central Bank Circular 909 in asking oil companies to pay the duties of goods still to be purchased for as long as these are covered by opened Letters of Credit.

"This is made crystal clear by the fact that inputted in the 2006 BoC collection was the advance payment of five shipments of Petron oil products which arrived in 2007, " he said

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