INTERNAL Revenue Commissioner Kim Jacinto-Henares wants Congress to pass a law lifting particular provisions to the bank-secrecy law to enable the agency to go after tax evaders and compensate for revenue losses presented by the proposed reduction in income tax to 25 percent.
“If the [legislature] will pass a law to lift bank secrecy for tax purposes and make tax evasion a predicate crime, there might be some room to adjust,” Henares said in a note to Communications Secretary Herminio B. Coloma Jr. “Without it or any revenue measure, we will still be looking at an amount that the government cannot collect,” she said.
The note highlights the need to craft legislation compensating for revenue losses presented by the proposed reduction in income tax to only 25 percent from the current 32 percent, the highest in the region.
The proposed reduction translates to foregone revenues estimated as high as P70 billion, an amount the Bureau of Internal Revenue must continue to generate or risk failure in the delivery of basic public services like security or education.
Henares clarified that “we [the government] are not against lowering the tax rates per se. But we have to look at the overall effect to the country.”
This developed as Malacañang shot down an alternative relief proposed by Sen. Juan Edgardo Angara to index or relate the income-tax rate to inflation in lieu of an earlier proposal rejected by the Palace to lower the income-tax rates.
“The government remains firm on its stand on maintaining the present tax system,” Coloma said on Monday. “We reiterate that taxes are the life blood of the economy.”
Coloma asserted that the Aquino government “must have a steady revenue stream to ensure the continued implementation of essential programs on social protection, poverty alleviation, employment generation, educational competitiveness, housing, universal health care; as well as for public infrastructure, as well as national defense and security.”
Responding to a query from the BusinessMirror if the Palace would consider Angara’s counterproposal, Secretary Coloma reported that Henares favors the status quo in income-tax rates.
“We are for status quo. There will surely be revenue loss from that [Angara] proposal [to adjust to inflation the taxable amounts per bracket in lieu of lowering income-tax rates],” Coloma quoted Henares as saying.
According to Coloma, Henares also believes the lawmakers are not likely to favor passage of any new revenue-related measure.