BIR wants to tax campaign contributions

abs-cbnNEWS.com | 10/23/2009 8:00 PM

MANILA - Under heavy pressure to raise revenues, the Bureau of Internal Revenue (BIR) has set its sight on the upcoming elections as another source of funds.

The BIR has issued Revenue Regulation 8-09 wherein it will slap a 5% withholding tax on all political contributions and campaign expenditures of candidates running for public office next year.

All candidates, political parties and contributors must register with the BIR as withholding agents, and will be required to get official receipts for goods and services they receive for their campaign activities.

The new regulation is meant to "maximize tax collections arising from campaign expenditures and contributions," the bureau said.

BIR Senior Deputy Commissioner Joel Tan-Torres said they are about to forge a memorandum of agreement with the Commission on Elections to ensure that the candidates, their supporters and parties comply with the new tax regulation.

"Furthermore, all our BIR offices throughout the Philippines will be conducting briefings to all candidates running for elective positions to educate them on their tax compliance responsibilities," he added.

The BIR, the country's main revenue earner, has been looking into other possible sources of revenues to meet its collection target, and help cover the country's ballooning budget deficit.

In the first 9 months, the agency collected only P557 billion, P39.2 billion short of its target for the period.

Its dwindling tax effort has widened the deficit to P237.5 billion in January to September, 345% more than the deficit incurred in the same months last year and just P12.5 billion shy of the full-year ceiling of P250 billion.

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