Palace: What’s the fuss over taxing campaign funds? TJ Burgonio Philippine Daily Inquirer
November 05, 2009
MANILA, Philippines—Malacañang is wondering why there is so much fuss over the Bureau of Internal Revenue's proposed five-percent withholding tax on campaign contributions, which it said is nothing new.
"The five-percent campaign tax is within the purview of the expanded withholding tax system of the BIR which is allowed under the BIR Code and it has been in existence for about 30 years now,'' deputy presidential spokesperson Anthony Golez said at a news briefing.
The new BIR requirement has stirred a debate as to its implementation and timing, as well as protests from political groups, such as the United Opposition, that say this was aimed at harassing them.
The BIR has issued an order imposing a five-percent withholding tax on a candidate's declared expenses and campaign contributions so it could monitor their expenses.
Under Revenue Regulations No. 8-09, all political candidates, parties and their donors should remit a five-percent withholding tax on their campaign expenditures and contributions.
Lorelei Fajardo, another Palace spokesperson, assured critics that the administration would comply with the order and she sought to allay fears this was being made to harass the opposition.
"All candidates for that matter presenting themselves to lead the nation should comply,'' she said. "This not just focused on the opposition. Even the administration candidates will be taxed. So there's no reason for anybody to say this is a strategy of the administration for the opposition candidates.''
Both spokespersons, however, conceded that there was some confusion about it, and that the BIR should mount an information campaign, and even go as far as appearing in Congress to explain its mechanics.
"Perhaps the BIR can explain why it's being implemented only now. It has been there for 30 years now,'' Golez said, even as he suggested that a case could be filed with the Supreme Court to seek a clarification.
Fajardo butted in and said: ``Perhaps even before they seek the Supreme Court's clarification, probably we could just invite the BIR in Congress so they'll have better understanding.''
As far as he understood it from BIR's explanation, Golez said that the withholding tax applied only to the goods and services that a candidate would avail himself of.
"Let us say a candidate will have to buy a shirt that will cost him or her P100. The five percent or the P5 out of that P100 is going to be withheld and the P95 is going to be the actual purchase. So the five percent will go to BIR and the balance of P95 will go to the supplier. Now, the 5 percent, where will it go? In the BIR it is going to be allowed as a tax declaration on the part of the supplier of the product and when they compute for the income tax... it is allowed as a deduction or a tax credit,'' he said.
