Friday, July 06, 2007 Gov't to rely on privatization income to reach revenue targets
FACED with a "daunting" revenue shortfall, the Department of Finance (DOF) said it is banking on privatization proceeds and dividends in order to meet this year's revenue and deficit targets and keep to the scheduled balanced budget by 2008.
Finance Secretary Margarito Teves said the government is expected to have a shortfall of P53 billion (P40 billion from BIR and P13 billion from BOC) for the first six months and that the first semester deficit target likely to be breached by about P6.4 billion.
Teves said government will keep to the target revenue collection of P730 billion for the Bureau of Internal Revenue (BIR) and P228 billion for the Bureau of Customs (BOC).
"The objective and the agreement is for us to still live within the P63 billion deficit," he said.
"It's going to be daunting. It might work on my pancreatitis again. So I need your help, your support, your understanding and patience. Kindly support the two commissioners and pray for us. Thank you," he said.
Teves was confined at the Asian Hospital last year for pancreatitis, a stress-related illness.
The finance chief, in an ambush interview after the briefing, admitted that he "never really anticipated that I would encounter this kind of experience. I try to counter health-related concerns by trying to put in more time to do some exercise to counter the tension."
"I'm okay, I think. Well, maybe if you open my chest, it's full of holes," he told Palace reporters in jest.
Teves said President Gloria Macapagal-Arroyo ordered the conversion of cases against tax evaders and smugglers into actual prosecution and conviction. He said the President also directed the DOF to look very closely into the oil imports because it is "counter-intuitive" that official records show a decline in imports when the economy is growing.
He said government plans sell 60 percent of its stocks at the Philippine National Oil Company-Energy Development Corp. (PNOC-EDC) amounting to P50 billion and its shares in the San Miguel Corporation (SMC) amounting to another P50 billion in order to cover the shortfall.
Teves said the bidding process for the first 20 percent of PNOC-EDC is ongoing and the proceeds would be obtained by the end of July or early August. He said the proceeds from the remaining 40 percent would be realized by October.
He said the issue with SMC would be threshed out before September or October following an upcoming meeting of farmers on July 5.
Teves said the privatization proceeds would be boosted by higher dividend payments from government corporations and financial institutions.
He said a cap on spending is not part of the plan because government believes that the privatization proceeds would be realized.
Teves said government is not cheating on revenue collections by turning to privatization because "rating agencies and financial analysts are looking at the total revenue" and "would prefer to see us performing well in the tax revenue."
Internal Revenue Commissioner Lilian Hefti said in order to plug the revenue shortfall, the BIR hopes to collect an additional P7 billion from business intelligence, P5 billion from audit systems, P1 billion to P2 billion from excise tax improvement, and P2 billion from arrears management.
Hefti said in order to address the tax leakages on excise tax, the BIR will introduce the use of marker dye on petroleum products and fuse on stamps on cigarettes and conduct stocktaking of raw materials and finished products of articles subject to excise tax.
She said the BIR will also focus on short-term audit of the VAT liabilities of taxpayers for the first semester of 2007 and the record of huge purchases. She said reading of point of sales machines would also be done to check the correctness of reported sales.
Hefti said the BIR is also working 12 to 14 hours a day and would require its people to work overtime on Saturdays to attain the deficit target.
Customs Commissioner Napoleon Morales, during the same press briefing, said among the action plans that his office has done is to issue demand letters amounting to more than a billion pesos for motor vehicles and to fast-track auction of forfeited cargo.
Morales said the BOC is also using state-of-the-art x-ray in order to detect technical smuggling, including mis-declaration, misclassification, and under-valuation.
He said the BOC is now open from 7 a.m. to 7 p.m. and that he has requested employees to post a skeletal force on Saturdays and Sundays.
Asked if they are willing to resign if government does not reach its revenue goals, Teves, Hefti and Morales said they serve at the pleasure of the President. (JMR/Sunnex)
