MANILA, Philippines ? Political parties balked at a new tax regulation imposing five percent levy on election expenses and contributions, saying it might scare away contributors, especially the small ones.

At the Ayes and Nays forum in Quezon City, Nacionalista Party (NP) spokesman and lawyer Adel Tamano said the regulation of the Bureau of Internal Revenue (BIR) could even be ?unconstitutional? since revenue measures should originate from Congress.

Tamano, who is eyeing a seat in the Senate, said the new measure was ?counter-productive? because it may just ?discourage? small supporters.

?If they know it's going to be taxed, it may discourage them,? he said.

Valenzuela Representative Rex Gatchalian, spokesman of the Nationalist People?s Coalition (NPC), said he was not in favor of taxing campaign contributions and expenses. Especially in the case of small contributors, he said they would want to ensure that whatever money they put in would be used to support the campaign of their candidate, not as income for the government.

The BIR on October 22 issued Revenue Regulation No. 8-09 that required political candidates and their supporters to set aside five percent of their campaign kitty.

The new rules will also require political parties and their candidates to register with the BIR as a withholding agent.

The new tax scheme, which is being implemented through a project called ?Iboto mo Kandidato, Nagbabayad ng Buwis na Wasto,? aims to maximize tax collection during the election period.

Those being taxed were reminded to comply with other obligations such as the remittance of their expanded withholding tax, the issuance of certificates stating the tax has been withheld, as well as the submission of official receipts from their supplier of goods and services.

The BIR has partnered with the Commission on Elections (Comelec) for this project.

BIR collections usually account for 70 percent of the national government's tax revenues.

This year, the government expects to spend at least P250 billion more than its budget. However, the BIR has not met its collection target, according to an Inquirer report.

Government earnings from January to September totaled P839.8 billion or 4.6 percent lower year-on-year (or compared to the same period last year) and only about three-quarters of the target for the period, the report added.

Of the total, the BIR represented P557 billion, which is 5.2 percent lower than the year-ago collections and 39.2 percent lower than its target.