Reconsider attrition law as way to manage fiscal woes, DOF urged

July 12, 2010

by superadmin

The Attrition Act moreover paves the way for the unnecessary streamlining of government bureaucracy.

Research group IBON Foundation calls on the Department of Finance (DoF) to reconsider its proposal of strengthening the attrition law to address the country’s deficit, saying that the measure passes the burden of efficiency to government workers and deregulates government function of tax collection.

The Attrition Act, which seeks to improve the collection performance of revenue-generating agencies, moreover paves the way for the unnecessary streamlining of government bureaucracy.

Newly-appointed DoF secretary Cesar Purisima, who was finance secretary when the Attrition Act was passed in 2005, announced last week that he is looking at strengthening the law to generate revenues for the cash-strapped government.

According to IBON, the attrition law is part of schemes that the World Bank pushed in the past, and has been criticized as a means to minimize government expenses by paving the way to reduce government workforce.

Government employees in revenue-generating agencies Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) are required to improve collection through a system of rewards, incentives and sanctions. Under this law, BIR and BOC officials who fall short of their collection targets would be dismissed from service. On the other hand, over performers would be given incentives, including cash.

Giving financial rewards to government workers also further encourages corruption in the agencies, the think-tank said. Moreover, there have been some cases where workers reportedly do not receive these financial incentives but are allegedly pocketed by a few officials.

The research group urged the DoF to instead decisively recover uncollected revenues, estimated at P170 billion, and run after huge tax evaders and smugglers. It also advised the new administration to review the existing debt policy, which allows for the automatic payment of government debts and drains potential revenues for the country. (end)