|
FINANCE
Secretary Margarito Teves confirmed Tuesday the serious
misgivings aired by business groups—citing past
experience of harassment by unidentified parties—over
the submission to a congressional public hearing of the
Department of Finance’s (DOF) sensitive database on
operations of companies seeking to avail themselves of
tax-credit certificates (TCCs) issued by the government
as incentives.
As a
compromise, Teves offered to allow the “viewing” of the
confidential private company documents sought by Rep.
Arnulfo Fuentebella from the DOF’s One-Stop Shop (OSS)
Tax Credit and Duty Drawback Center.
“Viewing
[the OSS documents] is possible, but we have to get it
back,” Teves told reporters after appearing at a
Senate-House oversight panel Monday. He indicated that
submitting the documents to become part of the public
record of the House inquiry on TCCS could be
“problematic” as they contain sensitive and confidential
data involving private companies that applied for the
tax credits.
He
admitted the possibility that submission of the
documents could trigger a slew of lawsuits against the
DOF and the OSS, to which the information were
submitted.
In an
exclusive story, the BusinessMirror had reported that
several business groups—both local and foreign chambers
and industry blocs—have quietly alerted Malacañang
Palace to the perils of an open-ended congressional
inquiry that they consider a risk to their operations
because it will release outside of the DOF that agency’s
sensitive database on the operations of companies
applying for tax credits.
One such
letter, addressed to Teves, lamented that “in the past,
data on TCC issuances to particular companies which were
illegally obtained from the OSS Center were used by
criminal syndicates to harangue legitimate businessmen
and companies. This was achieved by smearing their
reputation and linking them to the TCC scam at DOF.”
While
Congress has the power to require an executive office to
submit records and pertinent documents when Congress
performs policymaking and oversight functions, the
demand by Rep. Fuentebella for the DOF’s OSS Center to
release to Congress its entire database could jeopardize
the welfare of private businesses, according to highly
reliable sources.
On
Monday, sources said the congressmen were apparently
changing their tune and saying they sought only a list
of companies applying for TCCs, but an examination of
the minutes of the May 13 hearing clearly indicate the
context of the “request”—that is, that they wanted an
electronic copy of the database.
At a
point in the hearing when the congressmen present were
debating the wisdom of two systems—a tax credit setup,
or outright exemption (as part of the pending
rationalization of fiscal incentives)—“Deputy Speaker
Fuentebella,” said the minutes, “informed the body that
the problem started during the Cory administration, with
the issuance of EO 226 or the Omnibus Investments Code
when TCCs and transfers were introduced. He averred that
the system should work on the assumption that there is a
good database. In relation thereto, he asked the OSS to
submit a soft copy of companies availing themselves of
TCCs and transfers from 1998 to present to the
committee.” Sources explained that if the intent was to
assess whether the system was working because it is
based on a good database, then the congressmen would
logically be asking for the database itself, not just a
list.
The
center’s executive director Ernesto Hiansen could not be
reached for comment until press time, but BusinessMirror
sources earlier said Hiansen was reluctant to release
the database. The congressional inquiry is apparently
premised on allegations of “continuing anomalies” in the
conduct of operations at the DOF-OSS, similar to the
messy setup that made it possible for unscrupulous
parties, with connivance from certain center personnel,
to carry out the infamous “tax-credit scam” during the
Ramos administration that drained the government of an
estimated P5 billion to P8 billion from 1994 to 1998.
Reforms
were carried out after then-President Estrada set up a
task force in 1998; further reforms were put in place
under President Arroyo in late 2003.
Besides
the OSS, the Bureau of Internal Revenue and Bureau of
Customs also issue their own TCCs, and finance
department sources said the focus is unfairly zeroing in
on just the OSS, where reforms had brought down the
total amount of tax credits processed annually from a
high of P12 billion, before the scam was unearthed in
1998, to only P3 billion.
At a May
13 House hearing, Fuentebella reportedly alluded to
allegations of serious anomalies but did not provide
specifics, prompting fears that the inquiry may become
just a “fishing expedition.”
It was
unclear whether a second hearing set this week would
push through.
A May 13
public hearing was called by Congress based on a
February 6, 2008, resolution 442 of Fuentebella,
directing the House ways and means committee, chaired by
Antique Rep. Exequiel Javier, to conduct an inquiry “in
aid of legislation” on the “reported irregularities” on
the issuances of TCCs, by the DOF-OSS.
Such
anomalies must be stopped, said the resolution, because
the cash-strapped government badly needs to plug all
revenue leaks to maintain its fiscal program, especially
the 2008 national government total obligation budget of
P1.226 trillion.
In a
presentation at the congressional hearing, Hiansen said
that based on National Tax and Research Center (NTRC)
data, the Philippine government has issued a total of
P1.42 trillion in fiscal incentives to various firms for
the period 2001-2006, but the Center has issued TCCs
amounting to only P19.19 billion for the same period, or
1.35 percent of the total amount. The rest were issued
by BIR and Customs.
The
reforms taken since the scams were uncovered are
reflected in the thinning volume of TCC issuances, DOF
had said: from an annual average of P12 billion in
1995-1998 to an average of P3 billion.
(By
Lourdes Fernandez, Fernan Marasigan and Butch Fernandez) |
