MANILA, Philippines - Opposition Sen. Nancy Binay slammed on Monday the proposal of the Bureau of Internal Revenue (BIR) to lift the back secrecy law for tax purposes to bring the Philippines in line with countries establishing a single and global standard in tracking tax fraud.
Binay said such moves might create a chilling effect on the populace as well as members of the banking sector.
“Although I understand where Commissioner Kim is coming from as far as taxation is concerned, but her proposal has a chilling effect on the banking industry since there are more disadvantages than advantages,†Binay said.
Binay noted that there are issues on peace and order that need to be addressed first such as kidnapping where the lax on banking regulations might lead to more abuse by criminal groups.
“Can the BIR guarantee that the information will be for tax purposes and will not There are current exceptions under the bank secrecy law,†Binay said.
Senators Francis Escudero, Grace Poe, Vicente Sotto III, and Sonny Angara all see the need to study the matter thoroughly by weighing the pros and cons of the proposal.
“There are costs and benefits to that and we must determine if the benefits outweigh the costs. The benefits are better tax administration by eliminating fraud, misdeclaration and concealment of income,†Angara noted.
Angara noted that the costs may include capital flight and loss of confidence in the banking system. “But I think the commissioner is correct that the trend is towards an easing of restrictions,†the chairperson of the Senate committee ways and means said.
Poe said the matter should be studied and that the banking industry should be consulted before any laws related to lifting the Bank Secrecy Law should be scrapped.
Sotto recommended that the BIR put their proposal into a draft measure so that Congress can review it. “That’s the way to do it,†Sotto said.
According to Poe, the banking industry should be consulted on the matter. "The public might lose faith in the banks if their accounts are made open to scrutiny by the BIR. If this happens the economy may suffer," she said.
Poe said the BIR has the means to run after tax cheats pending any amendment.