BIR asked: How do you collect tax on poll funds? Dona Pazzibugan Leila Salaverria Christian V. Esguerra Philippine Daily Inquirer
November 05, 2009
MANILA, Philippines—The Commission on Elections (Comelec) wonders how the Bureau of Internal Revenue (BIR) can implement its proposed 5-percent tax on campaign contributions and spending if these are not reported in the first place.
Comelec Commissioner Gregorio Larrazabal Wednesday said the proposed tax could help the poll body monitor candidates’ expenses.
Told that candidates and campaign contributors usually underdeclare expenses and donations, Larrazabal said the government would have to be content with taxing only the declared amount.
“In effect, what we are doing is that although you are not declaring the whole amount, you are still paying, you still help the government monitor the expenses,” he said.
Larrazabal said a candidate was expected to pay the withholding tax on all his expenses and campaign contributions “directly to the BIR.”
Under Revenue Regulation No. 8-09, all political candidates, parties and their donors should remit a 5-percent withholding tax on their campaign expenditures and contributions.
The proposal would also require parties and donors to register as withholding agents. Candidates would also be asked to get official receipts for goods and services they receive in relation to their campaign.
The BIR expects to raise P1.4 billion by taxing campaign transactions and all activities of candidates, contributors and supporters.
Larrazabal said BIR officials sat down with the Comelec last week to discuss the plan. The poll body, he said, would continue to hold discussions on “how it will be implemented.”
Specific law needed
Last week, Comelec Chair Jose Melo said a specific law should be passed first before the campaign spending tax could be implemented.
“There should be a law taxing political contributions,” said Melo, a former Supreme Court associate justice.
Republic Act No. 7166, or the Synchronized Elections and Electoral Reforms Law of 1991, states that electoral contributions shall not be subjected to donor’s tax or any form of tax.
The Omnibus Election Code, or Batas Pambansa Blg. 881, states that electoral contributions can be anything in the form of a “gift, donation, subscription, loan, advance or deposit of money or anything of value, or a contract, promise or agreement to contribute” for the purpose of influencing the results of the elections.
Melo said the proposed tax should be discussed first with all stakeholders and should not be hastily imposed.
Members of the opposition are against the BIR proposal, but the head of the ruling Lakas-Kampi-CMD party is supporting the measure.
Harassment
The United Opposition (UNO) said the proposal could be used to harass opposition donors.
UNO president Jejomar Binay reminded acting BIR chief Joel Tan-Torres that there were doubts on the legality of the proposal.
“Aside from questions on its legality, the campaign tax favors moneyed candidates and administration-backed candidates who have access to national government resources. It would also cripple the opposition since the national government would now be able to pinpoint opposition donors from the business community,” Binay said in a statement.
Binay, the Makati mayor who has declared his intention to run for vice president in 2010, said opposition donors would now be vulnerable to harassment and would think twice about supporting members of the opposition.
Shortfall
He said the national government could improve tax collection by running after smugglers if it seriously wanted to improve revenue collection.
The BIR was supposed to collect P596.2 billion in the last nine months to September, but fell short by P39 billion. The shortfall forced then BIR commissioner Sixto Esquivias IV to resign last week.
With the government facing a huge revenue shortfall, Malacañang threw its support behind the BIR proposal.
Administration example
Executive Secretary Eduardo Ermita, also the interim president of the ruling Lakas-Kampi-CMD party, said the administration was willing to “even set the example” if only to help boost the government’s revenue collection.
“We are not going to turn our backs on it,” Ermita said in a media briefing. “We will do and we will respond accordingly to what is legal.”
Ermita shot down the idea that Revenue Regulation No. 8-09 might be used by the administration to harass its political opponents going into the 2010 synchronized national and local elections.
“You can be very sure that the administration will not do anything illegal that will somehow mar the conduct of an honest, orderly and peaceful elections in 2010,” Ermita said.
He said fears that the tax policy on campaign spending might be used against the opposition could have been brought up by some quarters to “keep the administration aware that they are ever vigilant in what (it) is capable of doing to the disadvantage of the political opponent.”
Retailers
Besides campaign spending, retailers in upcoming holiday bazaars will also be under the radar of the BIR to improve revenue collection.
Adel Tamano, who is running for the Senate under the Nacionalista Party, said the tax could discourage prospective donors, especially those who want to give a small amount.
“If they know it’s going to be taxed, it may discourage them. So on that basis, I see it as a little anti-democracy,” he said at the Ayes and Nays forum.
Valenzuela Rep. Rex Gatchalian, who is with the Nationalist People’s Coalition, was also concerned about what the tax would do to small contributors.
“The election process is about participation. We don’t want to alienate anybody. Every support should matter,” Gatchalian said.
Under the country’s election rules, there is a limit on how much candidates can spend for their campaign.
Candidates for president and vice president could spend P10 per registered voter. Candidates with a political party who are not running for president or vice president could spend P3 per registered voter. A political party could spend P5 per voter. With a report from Allison W. Lopez
