Tax bill to be refiled after Noy steps down

MANILA, Philippines - Sen. Juan Edgardo Angara vowed yesterday that he would refile the bill aimed at lowering income tax rates during the administration of the successor of President Aquino next year.

Angara, chairman of the Senate committee on ways and means, made the commitment after the House of Representatives archived the tax cut measure as Congress focuses on the budget approval.

“That’s their prerogative. We respect their decision. It’s a tough decision-making environment they are operating in,” Angara said.

Angara said no matter how the Senate wants to pass the bill, tax measures should originate from the House of Representatives.

“If House doesn’t pass it Senate can’t pass it, that’s the reality under the 1987 Constitution and the origination clause which states that all revenue measures must originate from the House,” he explained.

Since the measure has no support under the current administration, observers consider it dead in the water.

Once refiled in the 17th Congress and with a new batch of lawmakers, proponents are hopeful the tax bill can gain massive support under the new administration.

BIR insists lifting bank secrecy

The Bureau of Internal Revenue (BIR), meanwhile, is insisting on the lifting of the secrecy on bank deposits in the case of suspected tax evaders before it agrees to the proposal to cut individual and corporate income tax rates.

BIR Commissioner Kim Henares made the insistence during Friday’s plenary debates at the House on the proposed P20.344-trillion budget for 2016 of the Department of Finance (DOF), which includes the BIR.

It was Abakada party-list Rep. Jonathan de la Cruz who raised questions about the BIR’s proposal in exchange for its agreement to moves in the House and the Senate to reduce income tax.

Henares responded through Cebu Rep. Gabriel Luis Quisumbing, who is appropriations committee vice chairman in charge of the DOF budget. Resource persons are not allowed to participate in plenary debates, unlike in committee hearings.

Quisumbing said the BIR wants bank secrecy lifted on the deposits and other transactions of suspected tax evaders so the agency could examine these to support its tax evasion cases.

He said Henares also suggested that tax evasion be included among the predicate crimes in the Anti-Money Laundering Law (AMLA) for the scrutiny of bank accounts.

“These are among the compensatory measures the DOF-BIR is proposing in exchange for lower income tax,” he said.

De la Cruz said he was at a loss on how scrapping the guarantee on the secrecy of bank deposits in the case of suspected tax evaders would allow the government to recoup the projected minimum of P30 billion in annual revenue losses from reduced income tax rates.

Since the start of the term of office of President Aquino in June 2010, Henares has filed more than 200 tax evasion cases with the Department of Justice. It is not known how many of these have been elevated to the Court of Tax Appeals (CTA).

Henares has also assessed boxing champion and Sarangani Rep. Manny Pacquiao and his wife Jinkee for an alleged tax liability of more than P2 billion. Pacquiao has contested the assessment with the CTA. The last word from Henares on the case was that they were still pursuing it.

Quisumbing said other compensatory measures being proposed by the DOF-BIR are administrative remedies to make tax collection more efficient, including automating tax filing, assessment and payment.

He did not mention the increase in the value added tax (VAT) from 12 percent to 14 percent, which the two agencies earlier suggested.

The House has opposed the proposal to adjust the VAT to 14 percent.

A group of economists led by former budget secretary Benjamin Diokno has supported the proposal provided that individual income tax rates are reduced substantially.

The group said reducing income tax would give workers more disposable income, which they can choose to save rather than spend to avoid a higher VAT.

A higher VAT or consumption tax would prevent them from spending on non-essentials, it said.

The Diokno group pointed out that the present high rates mean that the government is collecting a big part of salaried tax filers’ incomes, aside from the 12-percent VAT on products that they buy. It’s better to keep workers’ earnings in their pockets than in state coffers.

The DOF-BIR proposals would mean that Congress would have to amend two laws – Republic Act No. 1405, known as the Bank Secrecy Law, and AMLA. With Jess Diaz