Comelec split on campaign tax

by Aries Rufo,

Posted at Nov 04 2009 06:59 PM | Updated as of Nov 05 2009 09:36 PM

MANILA - The Commission on Elections (Comelec) is divided on whether to help the Bureau of Internal Revenue (BIR) implement the 5% tax on campaign spending.

The BIR is proposing a Memorandum of Agreement (MOA) with Comelec to assist in disseminating information on the campaign tax, which the tax agency appears to be hell-bent in collecting this time.

A Comelec source privy to the MOA discussion said some poll officials are hesitant to involve the poll body in tax collection on the ground that it is not within the Comelec’s mandate.

Commissioner Nicodemo Ferrer confirmed with that during their initial discussion, some commissioners raised the argument that taxation is not the Comelec’s role.

Based on the recently issued revenue regulation by the BIR, candidates, political parties and contributors are required to withhold a 5% withholding tax on their campaign expenses and contributions.

For instance, in ad placements, candidates automatically would have to deduct a 5% tax on payments to the provider. This withheld tax should be reflected in the receipt to be issued to the candidate. The candidate will then remit the withheld tax to the BIR.

The scheme is being implemented at a time when revenue collections have taken a beating, and campaign spending is slowly on the rise as the electoral race heats up.

To help Comelec monitor expenses

Ferrer, who is in favor of the MOA, said the partnership with BIR could help the Comelec monitor campaign expenses.

Under the Omnibus Election Code, the Comelec is mandated to monitor campaign expenses and impose penalties on those who would spend more than the allowed amount.

But essentially, the Comelec does not have the logistics and resources to fully execute this mandate.

Violation in campaign spending was tantamount to disqualification before, but the penalty has been downgraded since it was a toothless provision anyway. A fine is now imposed on those found to have overspent.

So far, the only candidate disqualified by Comelec for overspending has been the late former Senator Raul Manglapus, who declared that he actually overspent during a senatorial election in the 1960s.
Under the proposed MOA, the BIR will provide the Comelec with data on campaign tax. Ferrer believes this could help the Comelec keep track of campaign expenses.

More truthful reports?

Right now, the present practice of candidates declaring to Comelec their expenses and contributions is of no consequence “since no candidate would declare against his own interest.”

Ferrer said the data from the BIR would compel candidates to be more truthful with respect to their report on campaign donations and expenditures to the Comelec, “since we would have data to easily counter-check these.”

Tax declarations are normally highly confidential information, and normally, a court order is required before these are released to third parties. The proposed MOA seeks to relax this rule as far as campaign taxes are concerned.