Large taxpayers buck advance tax payment

MANILA, Philippines - Some of the country’s large taxpayers are opposing a proposal in Congress seeking to  allow the government to collect in advance at least 10 percent of their tax dues for the  next two years.

Quezon Rep. Danilo Suarez sponsored a resolution authorizing the Bureau of Internal Revenue (BIR) to collect “10 percent from the gross receipts of all large taxpayers such as alcohol, tobacco, pharmaceutical, petroleum and telecommunications companies as  advance payment of taxes for the next two years or from 2010 to 2011.”

Suarez said the advance tax payments would serve as rehabilitation fund for all the provinces and regions devastated by the recent typhoons to help address the ballooning budget deficit and to prevent the government from incurring more loans.

Government officials said the damage left by typhoons Ondoy and Pepeng which battered

the country last year is estimated at P247 billion. The Department of Finance supports the pending resolution, saying that it would help address the country’s fragile fiscal position.

However, in a recent hearing on the resolution conducted by the House Ways and Means Committee, the private sector raised eyebrows on the measure.

The Makati Business Club, for one, said the proposal would “send a wrong signal to the market and drive away potential investors.”

MBC executive director Alberto Lim also said the resolution is unfair because 10 percent of gross sales is a “huge percentage.”

Globe Telecom legal counsel Rodolfo Salalima also relayed to the committee the company’s objections to the proposal, saying that the advance payment of taxes would be unconstitutional and that it would violate due process.