PALO, Leyte—President Benigno Aquino III on Thursday justified the collection of a 20-percent final withholding tax on the Poverty Eradication and Alleviation Certificates or PEACe Bonds, pointing out the government had no right to waive the implementation of tax laws.
President Aquino said that even before his administration took over, a ruling that the PEACe Bonds were subject to tax was already in the books.
“So I don’t have a right to waive the P5-billion tax that the government has to get. Taxes are approved by Congress. If you have to give exemptions, amend, decrease or increase, all these have to go through Congress,” President Aquino told reporters.
Placed in escrow
The Supreme Court earlier this week issued a temporary restraining order on the implementation of a Bureau of Internal Revenue ruling that would have collected up to P5 billion in taxes on the PEACe Bonds.
“A TRO is being issued enjoining the implementation of BIR Ruling No. 370-2011 against the PEACe Bonds subject to the condition that the 20-percent final withholding tax on interest income therefrom shall be withheld by the banks and placed in escrow pending resolution of the petition,” Supreme Court spokesperson Jose Midas Marquez announced.
President Aquino was in this province Thursday to attend the 67th anniversary celebration of Gen. Douglas MacArthur’s landing in this province in October 1944. The landing marked the start of the Filipino and US forces’ liberation of the Philippines from Japanese occupiers in the last days of World War II.
“We only inherited the whole issue of the Code-NGO, the PEACe Bonds, etc. The ruling was made long ago … it only came to us when it was already time to collect,” President Aquino said.
Nonetheless, President Aquino said, the issue was now before the Supreme Court and it would be up to the High Tribunal to decide on how the government should proceed.
Safer to impose tax
But as far as the executive branch was concerned, President Aquino said, “I think it is safer for us to implement the law the way we understand it rather than to ignore implementing the law and be guilty of not fulfilling our obligations and duties.”
Banco de Oro Unibank and Metropolitan Bank and Trust Co. led other lenders in asking the high tribunal on Monday to stop the government from imposing a 20-percent withholding tax on the maturing and supposed to be tax-free PEACe bonds.
The government was to pay P35 billion to investors that acquired the securities but a BIR ruling said that P5 billion of this would return to the government as a final 20-percent withholding tax.
The government sold the PEACe Bonds on Oct. 16, 2001, and raised more than P10 billion for its poverty alleviation efforts.