DoF presses for easing bank secrecy

By Elijah Joseph C. Tubayan
Reporter
THE DEPARTMENT of Finance (DoF) is pressing Congress to reinsert in a proposed tax amnesty bill a provision that authorizes the government to look into bank accounts and exchange tax information with foreign counterparts.
Lawmakers had removed this provision from the bills concerned, which are now up for deliberation in a bicameral conference committee before both chambers ratify these measures, arguing — together with tax experts — that this provision violates the Constitution.
Section 26 of the 1987 Constitution states that: “Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof.”
“It’s not a rider provision. It was part of that law, it was really part of that measure. It’s not a rider. I don’t know what people are waiting for. It was already there. We put it in and they will take it out, then they’re gonna wait for us? Just put it back in,” Finance Secretary Carlos G. Dominguez III told reporters last week when asked if his department will draft another bill.
House of Representatives Ways and Means committee chairperson Estrellita B. Suansing of Nueva Ecija’s first district had said that lawmakers will file another bill to relax restrictions on depositors’ information and provide for automatic exchange of tax-related information as soon as the DoF submits its draft.
But that means the two deleted measures will have to start from first base.
The 17^th Congress is scheduled to go on a Dec. 15-Jan. 13 break. And while it will convene on Jan. 14-Feb. 8 and finally on May 20-June 7, it is widely believed that lawmakers can focus on legislation only this year, as campaigning for the May 2019 mid-term elections will take up much of their attention starting January.
Sought for comment on Sunday, Ms. Suansing said: “The reason why we deleted that provision is it violates the one-subject rule.”
“We will insist on our version without the bank secrecy and AEOI (automatic exchange of information). The Speaker (Gloria M. Arroyo) was present in the TWG (Technical Working Group that decided on this matter).”
Senate Ways and Means committee chairman Senator Juan Edgardo M. Angara said in a separate mobile phone message yesterday: “Some Senators wanted it removed.
“We can discuss any possible return.”
Finance Undersecretary Antonette C. Tionko, a lawyer, said in an interview on Wednesday that the measures are not rider provisions.
“It’s related to the tax amnesty because in the tax code, there are provisions on bank secrecy included in the powers of the Commissioner to examine under certain circumstances. So it’s really related,” she explained.
“Honestly, if you want to have an effective tax amnesty, then you’ll need it because otherwise, it’s just like allowing anyone to just pay whatever and then they can get away with it,” she added.
“It’s almost like money laundering. We’re hopeful that the provisions will be included.”
Mr. Dominguez had said that “[t]he problem with the bicam[eral conference committee] is the fact that our original proposal is not completely adopted and it is very necessary for us.”
“We believe that the law on bank secrecy be relaxed in cases where there is a suspicion. As I mentioned, this is not being requested frivolously. If there’s a law for us to collect a tax and then you don’t give us the tools to do it, then it will be very difficult for us to do it,” the Finance chief said.
“If there was no such limitation on [checking] the bank accounts, the Mighty (Corp.) case might have been solved earlier. And you know that is $600 million or about P30 billion. So we do not know how much is out there. For all you know that is really small in comparison to what is being hidden. So that’s why it’s very necessary,” Mr. Dominguez explained, referring to the local cigarette firm whose assets were acquired by Japan Tobacco, Inc. late last year after the former settled its tax liabilities.
The Finance chief noted that the Philippines and Lebanon are countries with the strictest bank secrecy laws.
Asked whether the DoF will implement the amnesty program even without the tools that will enable it to verify information supplied by applicants, Mr. Dominguez replied: “We will see what the final version is going to be, but honestly, we really need that partner measure.”
The bills — which bagged final-reading approval in the House and Senate on Nov. 19 and 20, respectively — imposes an amnesty charge equivalent to a portion of taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal and administrative penalties for delinquency.
The bills offer amnesty on unpaid estate taxes and general taxes up to 2017.
The tax amnesty program was initially intended to complement Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act, and be implemented at the same time this year as both measures seek to raise revenues and expand the tax base.
The DoF expects the tax amnesty to yield up to P26 billion in additional revenue but said the main objective is to grow the tax base.
The government has offered tax amnesty 18 times since 1972, with the last offer in 2008 raising P4.91 billion, according to DoF’s National Tax Research Center.