How bank secrecy law helps tax evaders

Posted at Sep 15 2015 10:20 AM | Updated as of Sep 15 2015 06:20 PM

Watch also in iWantv or TFC.tv

MANILA - Bureau of Internal Revenue Commissioner Kim Henares defended Tuesday Malacanang's move not to cut income tax rates, saying doing so would lead to a higher budget deficit.

Speaking to radio DZMM, Henares likened the Philippines to a couple earning P90,000 a month but with expenses reaching P100,000 monthly. She said the couple still needs to borrow P10,000 a month to cover the deficit.

"In this kind of situation, would you tell one spouse to give up his or her job? If you did, you won't need to borrow P10,000 a month. You will have to borrow P55,000. Is that logical?" she said.

The Philippines has a fiscal deficit of P73.09 billion in 2014, with total expenditures reaching P1,981.6 trillion over P1,908 trillion in revenues.

Henares said that if government decides to lower income taxes, it would have to cut spending, which could affect basic services.

She also warned that lower income taxes could lead to a credit downgrade, which could lead to an increase in interest rates.

The BIR chief also pushed for easing of bank secrecy laws for tax purposes, saying the Philippines is one of three nations in the world that do not allow tax officials from inspecting people's bank records.

She said some people put their money in banks without paying the proper taxes.

"For as long as meron ho 'yan, diyan talagang mahihirapan tayong mangolekta. Kasi ang gagawin lang ho ng mayayaman, ng mga may kaya, mga may impluwensiya, itatago lang nila ang pera sa bangko, hindi natin makikita, hindi natin mahahabol."

Under the law, bank deposits are considered confidential in nature and can only be looked into once authorized by the Monetary Board based on suspicion of fraud.

"Nakikita namin may lupa sila, may kotse sila pero hindi namin nakikita ang pera nila sa bangko. Tatlong bansa na lang sa buong mundo ang ganyan - tayo, Lebanon at Switzerland," she said.

She also pointed out that some Filipinos, whenever they have extra cash, do not necessarily spend the money in the country but go on trips abroad.

"'Yung sa mahihirap, wala naman kaming nakokolektang VAT diyan dahil ano ba ang binibili nila? Pumupunta sila sa palengke di ba, saka sila magluluto sa kanilang bahay. Wala hong VAT 'yan."

"Sa middle class. pag may dagdag silang pera, saan ho ba nila ginagastos? Ang ginagastos nila, ang gagawin nila mag-a-abroad sila. Sa abroad gagastusin hindi naman dito."

RADIO DZMM, September 15, 2015