MANILA, Philippines - The House of Representatives is willing to consider the proposal of the Bureau of Internal Revenue (BIR) to lift bank secrecy on deposits, particularly in the case of suspected tax evaders.
BIR commissioner Kim Henares floated the proposal apparently in exchange for moves in the House and the Senate to reduce individual and corporate income tax rates.
“We can consider it. I am personally willing to sponsor the bill so it can be discussed as soon as possible. If it is truly the solution for BIR to finally meet its targets, then we should take a look at it seriously,” Marikina Rep. Miro Quimbo, ways and means committee chairman, said.
“But the status quo on individual income tax is unacceptable. We cannot let our salaried workers keep shouldering 90 percent of the tax burden while many entrepreneurs and professionals do not pay taxes,” he said.
Quimbo and his Senate counterpart Juan Edgardo Angara, are pushing for lower income tax.
However, the House and the Senate have adjourned for a three-week Halloween break and filing of certificates of candidacy without taking up a lower income tax bill.
Majority Leader Neptali Gonzalez ll said the House could not tackle any measure because the lower tax proposal is still with Quimbo’s committee.
Quimbo said it would be useless to endorse the measure without the agreement of the BIR, Department of Finance (DOF) and Malacañang, since President Aquino would just veto it even if Congress approves it.
During last week’s budget deliberations at the House, Henares insisted on the lifting of the bank secrecy for suspected tax evaders and the inclusion of tax evasion in the list of predicate crimes for the examination of bank deposits under the Anti-Money Laundering Law (AMLA).
The DOF and BIR had also proposed the increase in the value-added tax (VAT) from 12 to 14 percent.
The House opposes the proposal to adjust the VAT to 14 percent.
However, a group of economists, led by former budget secretary Benjamin Diokno, supports the proposal, provided individual income tax rates are reduced substantially.
The group said reducing income tax would give workers more disposable income which they could 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, the group said.
The Diokno group pointed out the present high rates mean the government is collecting a big part of salaried tax filers’ incomes, aside from the 12-percent VAT on products they buy.
It’s better to keep workers’ earnings in their pockets than in state coffers, it stressed.
The DOF-BIR proposals would mean Congress would have to amend two laws – Republic Act 1405, known as the Bank Secrecy Law, and AMLA.
The Bank Secrecy Law guarantees the absolute secrecy of bank deposits and other transactions, and investments in government bonds.
It provides for limited instances when deposits can be examined, like when the depositor agrees to it in writing, in impeachment cases, when ordered by a competent court in cases of bribery of public officials, and where deposits are the subject of litigation.
The Anti-Money Laundering Council is allowed to look into bank transactions if these are linked to a long list of predicate crimes enumerated in the law. Tax evasion is not included in the list.
Recently, the council examined the bank accounts of Vice President Jejomar Binay, who is facing corruption allegations, and those of members of his family and his alleged dummies. It ordered the freezing of those accounts.
President Aquino had initially frowned upon the proposal to cut income tax rates.
However, when proponents explained it to him, he ordered the DOF-BIR to review it. But he told lawmakers they have to come up with measures to recoup projected revenue losses.