Tuesday, August 5, 2014

Angara backs BIR's bid to be exempt from gov't salary cap

MANILA-The Senate ways and means panel chair today said he is backing the Bureau of Internal Revenue’s bid to be exempt from the Salary Standardization Law (SSL).

“If better pay would allow it to hire the best and reward the honest, then why not? But there should be performance benchmarks attached to any increase," Sen. Sonny Angara said.

“The bottom line here is to give incentives based on merit. So it can be outside or within the SSL framework. But once it is given, the recipient should live by the rule that to those much is given, much will be required," the senator stressed.

The idea of exempting the biggest revenue agency from the SSL, which sets salary caps in the bureaucracy, was first broached by Finance Secretary Cesar Purisima in his speech during BIR’s 110th anniversary rites last Aug. 1.

In pushing for BIR’s exemption, Purisima cited the example of the Bangko Sentral ng Pilipinas which was able “to professionalize its ranks when freed from the rigid salary structure of the law.”

BIR Commissioner Kim Henares welcomed the finance chief’s proposal but admitted that “higher salaries would also mean higher responsibility and accountability.”

Angara proposed to put in place an accountability mechanism, such as a tax advocate office, against corrupt and abusive BIR officials.

The lawmaker also urged the BIR to strictly implement Republic Act 9335 or the Lateral Attrition Law which provides for a system of reward and punishment for BIR officials and employees depending on their performance.

Under the law, officials and personnel of government collection agencies may receive financial incentives for surpassing collection targets but may be relieved or dismissed from their post for failing to meet the goals.

Nevertheless, Angara said he is open to whatever track will be pursued in raising BIR personnel pay.

“It can be a set of special incentives that is tied to meeting quotas or a law exempting it from the SSL," he said.

But if Angara will have his way, “the BIR’s bid should be taken within the context of reviewing the whole SSL structure.”

“The SSL is ripe for a review. If we raise the taxman’s pay, we must also raise the salary of taxpayers in the public sector, meaning the teachers, policemen and others," he pointed out, hinting of pushing for a new SSL for government workers.

On funding incentives while waiting for the SSL law, Angara said the BIR should be authorized to convert its annual P1 billion savings from its personal services budget to additional pay to its deserving employees.

“The BIR has authorized ‘permanent positions’ for 13,578 workers but only about 10,071 are filled. So instead of spending P3.74 billion for salaries, it only spends about P2.78 billion. Perhaps we can use the difference in augmenting pay,” he said.

The neophyte senator said the BIR deserves a higher compensation budget as 75 percent of government’s revenue is raised by the agency.

For 2015, the BIR is expected to collect P1.72 trillion from this year’s programmed P1.456 trillion. With BIR's proposed budget of almost P8 billion, the BIR is expected to collect P21,500 for every P100 of its budget.

Since 1989, three Salary Standardization Laws have been passed, the first being Republic Act 6758 in August 1989.

The next two were via joint resolutions of Congress in March 1994 and the latest in June 2009, which Angara co-authored in the Lower House when he was congressman of Aurora.

The SSL prescribes the government’s “Compensation and Position Classification System" which features 257 position classes spread out in 33 salary grades with each salary grade having eight steps.

Angara said he welcomed the DOF’s position as “this is a radical departure from its no pay hike, no tax break position” if no sources of financing are identified.

“This is a major thaw of its standard cold responses. Hopefully this ushers the era in which the DOF will be more amenable to tax breaks which have the same intention as pay hikes which is to put more in pay envelopes," he added.

Angara is author of a bill compressing the net taxable income brackets from the present seven to five, and lowering tax rates across-the-board.

Under Angara’s Senate Bill 2149, the “no tax zone” will be raised to P20,000. He wants to slash the current highest tax bite of 32 percent for income above P500,000 to 25 percent by 2017.

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