Bank secrecy law lifting: Senators wary
MANILA, Philippines - Senators are wary about the proposal of Bureau of Internal Revenue (BIR) Commissioner Kim Henares to lift the bank secrecy law for tax purposes.
Senators Francis Escudero, Grace Poe, Vicente Sotto, Nancy Binay and Sonny Angara said a study on the impact of the proposal on the confidence of banking industry players in the system should first be conducted.
Henares said the move is in line with the country’s establishing a single and global standard in tracking tax fraud.
Escudero said existing laws, including the bank secrecy law and the Anti-Money Laundering Act, already authorize the BIR to conduct financial probes on certain individuals for tax purposes.
“Any move to force private individuals to open their bank accounts for government scrutiny might be too much,” he said.
“The current exceptions to the bank secrecy law such as corruption investigation and AMLC (Anti Money Laundering Council)’s powers on private individuals, I believe, is sufficient,” he added.
Escudero, chairman of the Senate committee on finance, said he has filed a bill requiring all public officials to sign a waiver of the secrecy of their bank deposits with the filing of their statements of assets, liabilities and net worth.
Poe said Henares’ proposal might affect the banking industry. “The matter should be studied. The banking industry should be consulted,” she said.
She expressed concern that the public might lose faith in banks if their accounts are opened for scrutiny by the BIR.
“If this happens the economy may suffer. Anyway the BIR meantime has the ways and means to run after tax cheats pending any amendment,” she said.
Sotto proposed that the BIR submit a draft measure to Congress “so we can debate on the issue.”
Angara, chairman of the Senate ways and means committee, said there is a need to weigh the costs and benefits. But he said he believes Henares “is correct that the trend is towards an easing of restrictions.”
“We must determine if the benefits outweigh the costs. The benefits are better tax administration by eliminating fraud, misdeclaration and concealment of income, while the costs may include capital flight and loss of confidence in the banking system,” he said.
He said there should be safeguards, especially with respect to privacy and personal security, if the bank secrecy law is lifted.
“In the United States, there is a tax advocates office to keep an eye on regulator abuses,” he said.
Binay said the BIR proposal might cause a chilling effect not only on the general population but also the banking industry.
“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,” she said.
She said peace and order issues, including kidnapping, should be given priority over Henares’ proposal.