Duterte calls for lifting of bank secrecy after vetoing general tax amnesty

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Metro Manila (CNN Philippines, February 18) —  President Rodrigo Duterte has vetoed a provision under the newly-signed Tax Amnesty Act of 2019 which provides for a general amnesty program for taxpayers with deficiencies.

Duterte has nixed the "general tax amnesty" section under Republic Act 11213. The program would have given immunity to citizens from paying taxes, "arising from the failure to pay any and all internal revenue taxes for taxable year 2017 and prior years."

In his veto message, the President said he disagrees with the amnesty provision which may be prone to fraud in the future.

He asked Congress to pass a tax amnesty bill with more safeguard measures, including lifting bank secrecy, improving the automatic exchange of information, as well as provisions to ensure truthful declaration of net worth and assets.

"I believe that, ultimately, the original objective will not be met under the proposed framework. Without the provisions breaking down the walls of bank secrecy, setting the legal framework for us to comply with international standards on exchange of information for tax purposes, and safeguarding against those who abuse the amnesty by declaring an untruthful asset or net worth, a general amnesty that is overgenerous and unregulated would create an environment ripe for future tax evasion, the very thing we wish to address," Duterte said in his veto message.

He said while the program is meant to give a fresh start for taxpayers, it should not be used for the "gain of the few and the loss of the citizenry."

Executive Secretary Salvador Medialdea on Friday announced the President has vetoed parts of the bill, but did not immediately list down the provisions and why they were struck down.

The Tax Amnesty Act aims to enhance revenue administration and collection in the country. It also seeks to make the tax system more" equitable" by simplifying compliance requirements.

The law is said to complement Republic Act 10963 or the Tax Reform for Acceleration and Inclusion.

Meanwhile, Presidential Spokesperson Salvador Panelo on Monday said Malacañang is confident lawmakers will respond positively to Duterte's request on the tax amnesty bill.

"Ayaw niya ng general tax amnesty. Kasi nga, that will encourage them not to pay taxes in the future," Panelo said in his weekly media briefing.

[Translation: He does not like general tax amnesty. Because that will encourage them not to pay taxes in the future.]

He added Duterte's request to lifting the bank secrecy rule will help make sure taxpayers applying for amnesty will not get away with paying less than they should.

"Sinama niya yun kasi nga, because of the confidentiality, hindi mo malalaman kung totoo o hindi," he said. "Pero kung ili-lift mo nga naman 'yun, hindi ka makakapagsinungaling kasi madali tingnan 'yung deposits mo sa bangko."

[Translation: He included that because of the confidentiality, you won't know if what they're saying is true or not. But if you lift it, you won't be able to like because your bank deposits are easily accessible.]

Senate President Vicente "Tito" Sotto III meanwhile slammed the Presidential Legislative Liaison Office (PLLO) regarding the tax amnesty veto. He said the development is a "testament that we need to revitalize or even upgrade" the PLLO.

"This is the Nth time that we do not know what the Executive dept (department) wants from us," Sotto said.

"Like all the other bills vetoed, we could have addressed the provisions that (the executive department) does not want to execute. The (legislative department) does not consult a crystal ball to know," he added. 

Aside from the tax amnesty, Duterte also recently vetoed the Coconut Farmers and Industry Trust Fund bill, as well as the bill reconstituting the Philippine Coconut Authority.

CNN Philippines' Ina Andolong, Joyce Ilas, and Luchi de Guzman contributed to this report