Mr. Speaker …

More than a month ago, I called the attention of this chamber to the criminal haste at which some sectors of government intended to railroad a bill that would surrender to the private sector a duty that only a legitimate government can undertake.

I speak of the business of collecting taxes.  I exposed the attempt to create a revenue authority that is “private sector and market led” in everything else except its name, a revenue authority that kicks at the groin of ordinary citizens.   Engineered by a former BIR commissioner accused of plunder and designed by a “not-so-clever-and-agile” research and consulting firm in collusion with some Palace officials and officers of the Department of Finance, Budget and Management, and the Treasury.

I exposed to all and sundry the amateurish attempt at coercion, intimidation, and blackmail.  A plan so inept that it’s success hinged on forcing ordinary Filipinos to commit economic suicide by the payment of more taxes for less government programs and services and granting exemption to favored cohorts at government expense.

And all of this subterfuge to cover up a paper and money trail of tax evasion and financial manipulation that led all the way to Fort Bonifacio.  

The simpletons at the Department of Finance thought they could get away with it and they nearly did.  But their schemes were exposed and so their proposed bill is now dead in the water.  They thought they could fool a citizenry that has deposed two standing Presidents for much lesser crimes than the evil of  “taxation without representation”?  

Since I exposed this ruse, I have also been at the receiving end of the vilest and personal attacks against me.  These attacks did not come from the great unwashed.    So-called academics, professionals, and civil society representatives, who have decided that the best way to undercut my arguments and my reasoning is by turning to the personal and the unreasonable, are uttering them. 

Argumentum ad personam is always the sanctuary of those whose brains have stopped to grow and their heads begin to swell.

Mr. Speaker, I suppose you will agree with this representation that reorganizing tax governance and administration is an affair of state that is so strategic in importance as to determine whether or not this country will develop and prosper.  An affair of state which, unless you wish to court grievance and rebellion, cannot be left to the tax collectors and our fiscal authorities to decide, nor to us politicians to ponder.  It requires the full, active, and informed participation of the whole citizenry.  Neglect this rule and you might as well bring a flamethrower into this chamber and burn it down.  

The AGILE  Expose’

As recent as a month ago, there were persons in this chamber who thought they could subvert fairness, accountability, and transparency by proposing so-called radical changes in tax collection that have not been proven to work,  nor were theirs to suggest. 

Mr. Speaker, a month ago we moved to transfer the proper resolution of the proposed bill to the committee on government reorganization because that was the correct parliamentary route for resolving structural changes in governance.  We protested the unusual interest of the Ways and Means Committee in determining the course of action on an issue outside its turf.  What is worst, the leadership of this chamber has not only supported it, it is at the center of this insidious conspiracy.

Now, it has become a case of putting the cart before the horse when the Committee on Appropriations scheduled a committee hearing for the proposed bill. This was scheduled despite the fact that the Committee on Ways and Means Senior Vice Chairman, my colleague Herminio Teves, requested for the withdrawal of the committee’s approval of said bill. Also, Chairman Victor Sumulong of the Committee on Government Reorganization requested for the transfer of the NRA bill to his committee and moved that rehearing be conducted before his committee to afford everybody a chance to be heard.

But before you could act on this motion, Mr. Speaker, an explosive   controversy rocked the broadsheets.  We failed to foresee that while pushing to shift the discourse to the proper committee, the ‘Ides of March’ would teach an important lesson to the co-conspirators in their grand design to screw the public.  

I refer, of course, to the AGILE expose and its public relations disaster.  Coming on the heels of my last privilege speech, the staff of the BIR and their families were offered a brief respite from all of the accusations and charges of corruption unjustly hurled against them.  “Beware of what you wish for” is an oft-repeated cautionary word to denote how success can be the mother of disaster.

AGILE arrogantly announced in its website and documents that they were the “real policy makers” in the Philippines having successfully pushed for trade liberalization, energy and oil deregulation, utilities privatization to name a few.  AGILE portrayed itself as a shadow Congress, even a shadow Executive and a shadow Judiciary.  

AGILE was proud of its accomplishments and it was not averse to boasting about how it subverted local institutions to its agenda. AGILE’s operations told a tale of internal policy manipulation for personal gain, and exposed the treasonous acts of a number of policy advocates beholden to a foreign power.

For those among you who can still recall AGILE’s head of mission, Dr. Ramon Clarete is the same person who gave us the reporting mess and the errors in simple mathematical calculations that led to the gross over-commitments in minimum access volumes (MAVs) for pork, chicken, and other meat items a couple of years ago.  An example of this is that instead of permitting the entry of only 4,000 kilos of pork, the MAV commitment was increased to 40,000 kilos due to accounting errors.   He promised then that the errors would be remedied.  When the Senate ratified the WTO agreement, he irresponsibly dropped the country’s pursuit of these corrections.

Dr. Clarete is particularly infamous for also proposing that actual employment gains as a result of immediate accession to the GATT-WTO would total no less than an outlandish “one million new jobs at the end of the first year alone”.  In the textile and garments sector alone, Dr. Clarete promised 400,000 new jobs in the first year (1995). 

We are now aware that these promised jobs did not materialize. They were simply a ploy to win Congressional approval for early entry into the WTO.  The best example is in the garments and textile sector.  Instead of improving, the industry is in near-collapse.  None of the technocratic permutations and economic forecasts actually occurred. 

Mr. Speaker, these so-called experts are not beyond lying through their teeth or performing mathematical magic to achieve their agenda -- the complete and total submission of the country’s fiscal authority to the Washington consensus and our subservience to international financial institutions.  

Misleading and Exploiting the President to Push the Strategy

The same “not-so-CLEVER-and-agile-gang” is playing their old tricks again.  Having failed in their previous agenda to destroy the BIR from within, they are now launching a multi-million-peso campaign to wreck it from the outside.

In cahoots is a world-class plunderer (Rene Banez), an incompetent and dishonest BIR media strategist cum academic who pretends to be an economist (Alex Magno), and some top officials in our fiscal bureaucracy (Camacho, Edeza, etc.).  The strategy is to pour tens of millions of pesos in an insidious multi-million peso media blitz topped by a well-financed advertising campaign that is designed to pressure Congress into supporting a bill that would demolish the BIR, create a new revenue authority, and eventually privatize the system for tax collections.

The campaign strategy is geared towards misleading and exploiting the President to push for the new revenue authority called the NARA.  Despite evidence that  Malacañang had certified other priority bills,  these plunderers have projected a contrary picture and have continued to mouth the line that this administration supports the attempt to privatize the BIR. 

The campaign strategy is headed by some icons of civil society advocacy including those from the richly funded “WALANG KUKURAP” organization set up by Alex Magno and a media handler named Mawi Terrado.  Survey firms such as the Social Weather Stations (SWS) have also been conscripted to paint a bad picture of the tax collection agents but not their superiors.  Their task is to provide the symbols of broad societal support for the move to cripple the BIR and to hide permanently the billion-peso plunder which they have committed. 

Finally, at the tip of the spear is an attack to be waged in media regarding insider corruption at the BIR by the AGILE/USAID funded Philippine Center for Investigative Journalism (PCIJ).  You will recognize this study because it will focus on operations at a lower level and basically condemn the BIR rank and file.  However, the same study will protect Bañez, Camacho, and Co. from scrutiny.  Hasn’t anyone in this chamber noticed the “abysmal silence” of this so-called independent, multi-awarded, center for investigative journalism towards the large scale corruption and plunder happening all around us?

Protecting the Big Fish

Now let’s look at the plight of an ordinary employee at the BIR.  He is mostly involved in administrative functions of tax collection.  Of total BIR collections, 98% come from voluntary payments of all taxpayers. Only 2% is sourced from audit, where discretion of tax collectors, and the perorations of taxpayers who refuse to pay the correct amount of taxes, could result to corruption. What could then be the cause of the shortfalls and deficits? With the recent pronouncement of the incumbent BIR Commissioner confirming that 95% are tax cheats and that the tax collection for April overshoot by 2% of its projected goal.

Let me point out, Mr. Speaker, that tax evasion especially by large taxpayers is the root cause of corruption.

And this was the case under the watch of former BIR commissioner Rene Banez. Through unnumbered BIR Rulings he issued, his former employers and certain favored taxpayers avoided paying the right taxes. Banez used to work for Metro Pacific Group of Companies owned by the Salim Family of Indonesia, long known to be the biggest crony of deposed Indonesian strongman Suharto. A conglomerate of some of the biggest corporations in the country is owned or controlled by the First Pacific Group such as Metro Pacific Corporation, developer of the multi-billion peso Global City project in Fort Bonifacio; telecommunications giant PLDT and its subsidiaries SMART and PILTEL; Negros Navigation; National Broadcasting, a national radio network; 1^st E-Bank, formerly the PDCP Bank, and other huge corporations.

Bañez, after a short-lived and lackluster stint as deputy commissioner at the BIR, rejoined the private sector as director in charge of tax payments, and later as tax consultant of the Metro Pacific-PLDT Empire.  He shaved the tax liabilities and payments of Metro Pacific and other firms such as SMART and PLDT. He grossly under-priced the market value of Fort Bonifacio land to further depress the required tax payments.

I invite your intense and focused attention to these anomalies perpetrated by Banez and his cohorts that caused the collection deficit.

Anomaly No. 1 The PHP 1.189 billion documentary stamp tax liability of Fort Bonifacio Development Corporation, Banez’s former employer, on its purchase of land from the government in Global City, which it passed on to the Bases Conversion Development Authority and eventually paid by the government through SARO No. BMB-D-00-00351. Including increments, the amount has ballooned to PHP 2.67 Billion.

Anomaly No. 2 The PHP 5.678 Billion erroneous claim of tax refund by the above, on its inventory of raw land acquired from the government.

Anomaly No. 3 The PHP 28.8 Billion revenue loss arising from the reduction of zonal valuation of land in Bonifacio Global City, instigated and promulgated by Banez when he was commissioner.

In sum, he strategized, engineered and even pushed personally billions of pesos worth of tax evasion schemes, which include the issuance of unnumbered and unaccounted BIR Rulings granting tax exemptions to favor select taxpayers who belong to the Makati Business Group, that defrauded government of much-needed revenues that he was entrusted to generate during his watch at the BIR. 

During Banez’s term as BIR Commissioner, BIR recorded the highest ever collection shortfall in its history. Official BIR collection figures show that it was during the term of Banez that income taxes paid by individuals, the nation’s workforce, almost approximated corporate income taxes, a deviation from the ratio on income taxes collected by previous commissioners.

Banez may have intentionally tolerated the slow down in tax collection. Why? Banez and his co-conspirators were setting the stage for the grand plan to abolish BIR and replace it with an Internal Revenue Management Authority (IRMA), which was changed to a National Internal Revenue Authority (NIRA), and finally, a National Authority for Revenue Administration (NARA). Let us remember that Banez, upon assuming the helm, declared that he would “destroy the BIR and build a new one.”

Very clearly, Banez and his co-conspirators, namely DOF, DBM, Treasury, AGILE, the Makati Business Group, and the Salim empire, deliberately sabotaged BIR collections to justify their insidious plot to abolish the BIR and replace it with their vision of a corporatized tax collection agency, a clone of their own making that will be their puppet.

Yet the ordinary BIR employee is bombarded daily with charges of incompetence and corruption.  He is blamed for the deficit, and for the government’s failure to raise enough funds for development programs and initiatives.  Consultancy groups such as AGILE accuse him of corruption.  USAID and AGILE then pay groups such as the Philippine Center for Investigative Journalism (PCIJ) to destroy his credibility and integrity. 

What should be done under these circumstances ? 

Mostly the BIR rank and file remain quiet because they know that it is they, the small fry, that is often fried whenever exposes’ of this sort emerge in the media or in public.  They rationalize their actions by saying that these attacks will subside after a couple of weeks.  But today it is different. The conspirators are going for the jugular at all costs despite Constitutional and Civil Service Law violations. Ironically, their bitter and incompetent former boss, fired for inefficiency and charged with corruption, is scot-free and visibly spearheading the campaign to abolish the institution.  

And how is he going to do this? By insisting that BIR personnel are corrupt.  

Mr. Speaker, the dilemmas of public service, which I am narrating, is not intended to provoke sympathy for the ordinary public servant in our government.  My objective is to uphold truth, justice and accountability.  It is always the case that the foot soldiers are the ones sacrificed to achieve the ends of the treasonous conspirators.

Laying the Blame Elsewhere

Mr. Speaker, why are we laying the blame elsewhere?  Tax collections do shape the state of the budget deficit.  But the BIR is not the main sculptor, there are other principal and bigger contributors.  The most fundamental and most determinant factor is the rising cost of debt servicing, and the automatic appropriation clause, which mandates that debt repayments gain a headway in comparison to other expenses for health, education, or peace and order.  The secondary reasons are the over-all state of the economy, and their impact on domestic interest rates, which continues to rise. 

The clearest proof of this argument is a comparison of the BIR contribution to the total deficit.  In the previous year, the BIR shortfall of 27 billion contributed only 13% of the total budget deficit of PHP 212 billion. 

In short, Mr. Speaker, the Bureau is being made to account for the failures of others.  I point my finger at the DOF, DBM, Treasury, and Central Bank officials who have made bond flotation and local and international borrowing, and even grand plans to sell off the country’s “family jewels” here and abroad, a cornerstone of their fund raising strategy for the government.  Specifically, plunder charges have been recommended against Secretary Camacho and National Treasurer Sergio Edeza for their participation in the issuance of the controversial PHP 10 billion Peace Bonds.  Banez should likewise be included relative to the manner and timing of the issuance of his ruling on exemption favoring RCBC.

The success of the tax administration effort is actually a product of strong and accountable governance and leadership. You cannot destroy, restructure or replace an organization and an institution of national life just because there is an accusation of corruption within its ranks. If this is to be our modus operandi, and our prescription for good governance, then we might as well demolish this shantytown, which we call the PHILIPPINE REPUBLIC.

Mr. Speaker, we must recognize that the BIR is no different from the DOF, the DBM, the Treasury, or the BSP. Behind these institutions and edifices are people. People whose basic rights are guaranteed by our laws and must at all times be protected. People with families. People who need
to send their children to school and to put food on their tables.

These people deserve an effective, efficient and honest leadership that seeks to be a model of good governance. Under the watch of Banez, it was “his” business as usual. Banez and his cohorts, within and outside government, were wimp, limp, and corrupt. Most of all, they were mediocre yet arrogant, saintly yet predatory. And that is all there is to it.

Victory at the Court of Tax Appeals

Mr. Speaker, to conclude this speech, I am pleased to announce the first fruits of our effort to make Rene Bañez and his cohorts account for the astronomical tax scam making the government pay for the tax liability of Metro Pacific. Last March 5, 2003, the Court of Tax Appeals declared with finality that Metro Pacific Corporation is liable for Documentary Stamp Tax and was ordered to immediately pay in full the amount of PHP 1.068 billion to the government. 

 This important news was buried in the broadsheets except for one newspaper --- ‘TODAY’ , which gave the news the prominence which it deserved.  Perhaps the million peso advertising campaign is now circulating in the media?

Mr. Speaker, I invite you and our other colleagues today to join me in filing a joint resolution: 

- Asking the BIR to execute the immediate collection of the PHP 1.18 billion plus increments for documentary stamp tax which Metro-Pacific owes the government;

- Asking the DBM and the Treasury to return to the military funds the sum of PHP 1.18 billion, which was erroneously appropriated to pay for metro Pacific’s tax liability;

- Asking the present BIR leadership to account for all the numbered and unnumbered Rulings issued by ex-commissioner Banez and to nullify all unaccounted Rulings;

- asking for a Congressional inquiry into anomalies I have aforementioned which have defrauded government of PHP 38 billion at the very least.

These are the real roots of our budget deficit. Yet the BIR is being turned into a scapegoat for the financial stranglehold, which the banks now hold over our fiscal and regulatory agencies. The plot to abolish the BIR is being used as the cover-up for the large-scale tax evasion and grand profiteering at the expense of the public.

It’s time we started looking at the type of leadership we provide, rather than the sort of people we have.

And this can be given flesh and meaning and a good start at the BIR. By not succumbing to the pressure tactics, black lies and insidious influence of the powerful forces behind the sinister conspiracy to abolish the BIR but to strengthen and institute meaningful change from within the institution.

Thank you, Mr. Speaker.