MALACAÑANG insists the Chief Executive is duty-bound to impose the P5-billion withholding tax on the Poverty Eradication and Alleviation Certificate (PEACe) bonds, despite the Supreme Court’s recent decision temporarily restraining the Bureau of Internal Revenue from collecting such tax.
President Aquino said on Thursday that as the implementer of the law, Malacañang has no choice but to collect the 20-percent final withholding tax on the P35-billion PEACe bonds unless the Supreme Court lifts its temporary restraining order (TRO).
On Tuesday, Mr. Aquino met on the bond-tax issue with Finance Secretary Cesar Purisima, Internal Revenue Commissioner Kim Henares, and some members of the Caucus of Development NGO Networks (CODE-NGO) led by its chairman, Andrea Maria Patricia Sarenas.
“I have no right to waive the P5-billion tax that the government must collect. Taxes are imposed by Congress. Any exemption or increase or reduction [in taxes] is up to Congress. We just implement the law,” he said. “It is safer for us to implement the law the way we understand it, rather than to ignore implementing the law and be
guilty of not fulfilling our obligations and duties.”
The President said the failure of the Executive to collect the right taxes would be a “dereliction of duty,” even if the ruling to collect the final withholding tax on the bonds was made by the previous administration—the same administration that initially believed it was tax-exempt.
Anyway, he said, the matter is “in the court right now and the courts will decide whose interpretation is correct.”
Secretary Ramon Carandang of the Presidential Communications Development and Strategic Planning Office, who attended the meeting, said CODE-NGO “tried to argue its point before the President,” resulting in “a very frank discussion of perspectives.”
“The President said let’s leave it with the courts, because the case has already been filed. So to some extent, it’s out of our hands, it’s in the hands of the court. We’re not doing this to make things harder but we are bound to comply with regulations that are in place,” Carandang said, recalling what Mr. Aquino told CODE-NGO.
He said CODE-NGO argued against the tax liability but Purisima and Henares informed them of the 2004 BIR ruling, which the Aquino administration inherited and is compelled to implement.
Asked about concerns that collecting the P5-billion tax may drive away investors as it would reflect inconsistent government rules and may make the Philippines a high-risk investment site, Carandang said, “I don’t think it will necessarily make us more risky. I think this is a tax dispute and it’s as simple as that.”
He noted that the court resolution of the issue would result to “clarity.”
“By taking it to court, we are eliminating the uncertainty and providing clarity. One way or the other, there will be clarity. At the end of the day, that’s what investors want, they want clarity,” he said.
On whether it was difficult for the President to address the issue, since CODE-NGO is among his supporters, Carandang said, “I think it’s very clear that the President wants to do what is legal and what is right, regardless of who’s on the other side. And in fairness to CODE-NGO, it is simply arguing the merits.”
