By Chino S. Leyco
Finance Secretary Carlos G. Dominguez III supported President Rodrigo R. Duterte’s decision to veto the general tax amnesty provision without the corresponding easing of the country’s bank secrecy law and other measures against tax evaders.
Finance Secretary Carlos G. Dominguez III (Bloomberg photo)
Dominguez said it is a prudent decision of the President to line-item veto the implementation the general tax amnesty as it does not have safeguards against the possibility that the taxpayers would again evade the government in the future.
To make a general tax amnesty effective after its implementation, Dominguez said that Congress should authorize the Bureau of Internal Revenue (BIR) to look into bank accounts and exchange tax information with its foreign counterparts.
Through access to bank accounts, the finance department is confident that it will be difficult for the taxpayers to declare lower income than the actual.
“The President was constrained to veto the portion of the law covering the general amnesty because of the lack of provisions breaking the walls of bank secrecy,” Dominguez said in a mobile phone message sent to finance reporters.
He, likewise, cited that the chief executive line-item vetoed the provision because it does not create “the framework for complying with international standards on exchange of information, and other safeguards against those who abuse by declaring untruthful assets or net worth.”
“Like what we have been advocating in Congress, the President saw it fit that this happens with the corresponding tax administration measures to strengthen enforcement against current tax evasion,” Dominguez said.
“The President thus encourages the Congress to pass another general amnesty law with these provisions,” he added.
Should the Congress-approved general tax amnesty is implemented, the DOF warned the government would lose P15 billion in additional revenues.
The DOF was the one that proposed for a general tax amnesty with the corresponding lifting of the bank secrecy law and the exchange of information.
However, the House of Representatives and the Senate did not adopt the entire proposal of the DOF. Instead, Congress only cherry picked the tax amnesty on all unpaid internal revenue taxes.
Dominguez had said the easing of the bank secrecy law could unlock billions of pesos kept away from the government authorities. He pointed out that the country’s bank secrecy law is among the world’s most restrictive regulations.
The Philippines together with Lebanon and Switzerland are the only countries in the world that have a bank secrecy law and the Philippines together with Lebanon are the two remaining countries in the world where tax evasion is not a predicate crime in anti-money laundering activities.
Based on an earlier estimate by the finance department, the easing of restrictions in the bank secrecy law could boost the national coffers by at least P300 billion. (CSL)