Why did Kim Henares blink?

Internal Revenue Commissioner Kim Henares was the first to blink in the confrontation with the Philippine Chamber of Commerce and Industry (PCCI) over Revenue Regulation (RR) No. 18-2012. Under this RR, issued on Oct. 22, 2012, and published on Jan. 3, 2013, all unused receipts/invoices printed prior to the RR’s effectivity will no longer be valid after June 30 of this year—whether these be official receipts, or sales/commercial invoices—and should be turned over to the Bureau of Internal Revenue. Starting July 1, they will have to issue receipts printed under new authorities to print, which they had until April 30 to apply for.

And what was the reason for this RR? In essence, to tighten up the authorization and printing process (including the accreditation of printers and limited periods of validity) of those receipts/invoices,  in order to reduce, if not eliminate entirely, the proliferation of fake receipts that reduce the government’s tax take.  Moreover, printing businesses set up solely to print the receipts/invoices, and owned by BIR employees or their relatives, were barred from accreditation, thus eliminating the pernicious practice whereby businessmen asking for the authority to print were given a hard time unless they gave the printing job to the BIR employee/relative.

In other words, the RR was issued as part of the government’s war on inefficiency/waste/corruption.  So one would have thought that the business sector, which regularly complains both loudly and bitterly about inefficiency and corruption in the BIR, would jump at the chance to help close the loopholes, as it were.

Unfortunately, one would have thought wrong. The businessmen were in an “uproar,” to quote a newspaper report. The six-month transition period provided in the RR was too short, apparently, and would result in small businesses incurring losses. If Sergio Ortiz-Luis, an officer of the PCCI and president of the Exporters Confederation, has been quoted accurately, businessmen needed “at least” one year for that transition, presumably to avoid those losses.

So that’s what the controversy was all about:  Kim Henares maintaining that six months was actually more than sufficient time to prepare for the reforms, and the business community saying that it needed “at least” one year.

Who is correct? Look at it this way, Reader. For Ortiz-Luis’ claim to hold any water, his assumption must be that businesses, at the start of the year, have on hand one year’s worth of receipt booklets, rather than at most six months’ worth of those booklets (which is what the BIR and Kim Henares are obviously assuming).

For big businesses, whether they hold six months’ or one year’s worth of receipts is immaterial, because the cost of six months’ worth of receipt booklets has to be minuscule in their scheme of things. So they are out of the picture, and we are left with the small businesses, the hand-to-mouth businesses, as it were.

But if they were small, hand-to-mouth operations, why would they be putting their scarce cash into one year’s worth of receipt booklets at the beginning of the year, when there are so many competing demands on that cash? It wouldn’t make sense, right?

In other words, Kim Henares’ assumption has to be the correct one.

And yet, she blinked. And postponed the July 1 start of the system of new receipts by another 60 days.

Frankly, if Kim Henares is left to her own devices, I don’t think she would have given in to pressure from the PCCI. She calls the shots as she sees them. She must have given in, therefore, to pressure from her administrative superior, Finance Secretary Cesar Purisima, who was the one who signed RR 18-2012 in the first place, with Kim Henares’ signature over the words “Recommending Approval.”  That she gave in to a two-month extension of the deadline rather than a six-month extension indicates that she can be pushed only so far.

But the real loser in this controversy isn’t Kim Henares. The real loser is the Filipino people. In our war against corruption and inefficiency, Kim Henares has been one of our most committed and persevering warriors. I have heard complaints about her stubbornness, but not one single complaint about her integrity and competence. She’s not doing it for herself, she’s doing it for us.

Obviously, she has not endeared herself to a lot of people in the process. There are the 160 cases that the BIR has filed in the Department of Justice against alleged tax evaders (only 22 of which seem to be in the courts at this moment, but that’s not her fault), who certainly are not pleased. There are some BIR employees whose little businesses and “rackets” she is trying to close down, with RR 18-2012 as well as with other reforms. So they’re not going to take that sitting down. And then there are the big businesses whose backs she will not scratch, because she doesn’t need for them to scratch hers in the first place. They are certainly not pleased.

Many knives are out for Kim Henares, and this confrontation with the business community, unfortunately, may be one of their manifestations, with arguments, however asinine, being raised against her. The most asinine is the complaint that the imposition of a P50,000 fine for not issuing the new receipts by July 1 (now moved to Sept. 1) is excessive, and will hurt (again) small businesses.

Reminders: One, it will hurt them only if they do not comply with the law; and two, it is about time people were punished, instead of coddled and protected, when they do not comply with the law.

Kim Henares deserves bouquets, not brickbats.