“And for the first time in my life, I know what it’s like to be a happy man, mm
Happy Man
And for the first time in my life
You’ve given me something I can understand, mm
Being a happy man”
The chorus line of Happy Man, a song popularized by American rock band Chicago in 1968, comes to mind, and I believe it is an apt description of the feeling of Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui, Jr. and, consequently, Finance Secretary Ralph O. Recto.
In the next few days, the national government is expected to disclose the income performance of the revenue-generating agencies – the BIR, which contributes the biggest slice to the national coffers, and the Bureau of Customs.
From what I gathered along the DOF corridors, BIR has outperformed its 2024 revenue assumption pegged at P2.848 trillion, with the latest figure I’ve heard being P2.86 billion in collection.
Based on my recollection (before I was pulled out of covering the banking and finance plus the market beat to wear an editorial desk hat), this is the first time BIR registered such a coup in nearly 20 years.
Apprehensive as I am, indeed Virginia, it’s a milestone considering that tax collection is almost always a Sisyphean task. This is aside from the fact that BIR isn’t the most glamorous bureau, often bogged down by bureaucracy, historically plagued by inefficiencies, and has been listed among the not-too-trusted government agencies.
Like you, this nosy chronicler of developments is curious about the overperformance narrative, particularly against the backdrop of Mr. Recto’s recent admission that the economic performance for the year just past may fall short of its six to eight percent range aspiration, pointing the blame on the serious of strong weather disturbances that hit the country during the last months of 2024.
Economics 101 tells us that robust economic performance translates to higher revenue collection. Despite the lower gross domestic product (GDP) expectation, BIR performed better and delivered results.
So, what’s the backstory?
Apparently, Mr. Lumagui’s approach uses a phrase popularized by Wassily Leontief, “simple yet elegant.”
An A1 but muted source told me that the Commissioner, a homegrown and held various posts in BIR – technical assistant to the Commissioner, tax fraud head of Region 6, and head of the task force to boost tax collection – before his appointment anchored his reforms on four pillars: robust enforcement, stellar taxpayer service, institutional integrity, and digital transformation.
Adding to these pillars is Mr. Lumagui’s commitment to culture change. These aren’t just buzzwords for the BIR workforce but the backbone of a strategy showing promising results.
Tax compliance, an issue that is very close to my heart as it’s one of the continuing programs of my Rotary Club Makati-Paseo de Roxas, is now relatively easy through BIR’s digital transformation.
Add to this is the creation of the Run After Fake Transactions (RAFT) task force, a first of its kind, that directly tackles the long-standing issue of “ghost receipts” — a shady practice that’s drained the treasury for years.
Just an aside, with the mushrooming of restaurants, bistros, and cafes, specifically in the heart of the Central Business District of Makati, I recommend that the BIR should intensify its tax mapping initiative, which aims to expand the Bureau’s tax base, enhance payment compliance that in turn increases tax collection efforts.
By going after these phantom transactions, the BIR signals that it’s no longer business as usual. One restaurant I went to refused to grant the senior citizen’s discount and has no official receipt, just a sale invoice.
Another factor, which I believe contributed to its overperformance is the ISO certification and obtaining the Civil Service Commission PRIME-HRM (Program to Institutionalize Meritocracy and Excellence in Human Resource Management) accreditation, which integrates and enhances personnel management assessment.
Equally important is the ISO management certification, which is equated to improved efficiency and productivity, including strategic planning and employee engagement.
With the bar collection bar raised higher, there’s no room for complacency now, and sustainability is the game’s name moving forward.
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