Press Release
July 27, 2016

Pimentel seeks uniform tax for excess campaign contributions

Senate President Aquilino "Koko" Pimentel III today sought the passage of a law that would impose a uniform tax for excess campaign contributions that were unutilized, unreported or erroneously reported.

He filed Senate Bill No. 296 to address the absence of a law on the tax treatment of unutilized, unreported, or erroneously reported campaign contributions by political parties, party-list groups and candidates.

Pimentel said Republic Act No. 7166 only provides for exemption of duly reported contributions given to candidates, political parties or party-list groups from payment of a donor's tax.

"Clearly, the law is silent as to the treatment of unreported or erroneously reported campaign contributions as well as unutilized campaign contributions," said Pimentel, president of the administration party PDP-Laban.

The silence of the law, he said, prompted the Bureau of Internal Revenue (BIR) to issue a revenue regulation, imposing tax rules on used and unused contributions and a penalty for failure to file the expenditures with Comelec.

Pimentel said the BIR directive, however, caused confusion because of the income tax treatment on campaign contributions and the absence of a law imposing such income tax payment.

"It is a well settled doctrine that since the imposition of a tax is a burden on the taxpayer, it cannot be presumed nor can it be extended by implication," he said. "A law will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously."

He said the intention of the BIR was laudable because it prevented candidates, party-list groups and political parties from using the election campaign as a money-making business.

"Thus, this bill addresses the absence of a law on the tax treatment of unutilized, unreported, or erroneously reported campaign contributions," said Pimentel.

He said he is proposing a uniform tax of 30 percent on unutilized, unreported or erroneously reported campaign contributions for a candidate, party-list group or political party to fully utilize the funds.

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