Tax & Revenue

House Panel approves Tax-Free Contributions to Political Parties

Date: 05 February 2019; Type: Legal News; Source: House of Representatives

The House Committee on Ways and Means chaired by Rep. Estrellita Suansing (1st Distric, Nueva Ecija) approved on Monday the tax provisions of a substitute bill, principally authored by former President and now Speaker Gloria Macapagal-Arroyo and Majority Leader Fredenil Castro, seeking to strengthen the Philippine political party system.

The proposed "Political Party Development Act" consolidated HB 697 authored by Speaker Arroyo, HB 522 by Majority Leader Castro, HB 1695 by Rep. Maximo Rodriguez Jr. (2nd District, Cagayan de Oro City), and HB 7088 by Rep. Gary Alejano (Party-list, MAGDALO).

In particular, the panel approved Section 11 of the measure which provides that voluntary contributions to any political party shall be subjected to limitations and conditions.

First, contributions shall be subject to a maximum of P1 million from a natural person and a maximum of P10 million from a juridical person.

In addition, any contribution in cash or in kind to any political party for a campaign purposes, duly reported to the Commission on Elections (COMELEC) in accordance with Section 13 of Republic Act 7166 or the "Synchronized National and Local Elections Act" shall be exempt from the donor's tax.

Finally, no foreign national or entity shall be allowed to give contributions to any political party.

Voluntary contributions to a political party shall be deposited by the contributor to the account of the party with any reputable bank accredited by the COMELEC at any time but not later than 15 days before the day of the election.

The accredited banks shall issue a corresponding receipt to the contributor on the amount deposited, and shall submit to the COMELEC a statement of account of every political party with bank deposits.

The COMELEC shall cause the publication of the bank accounts of all political parties in any newspaper of general circulation within a reasonable time as determined by the COMELEC.

The measure aims to institutionalize reforms in the financing of electoral campaigns so as to promote accountability and transparency as well as to provide financial subsidies to political parties, to augment their expenditures for campaign purposes and for party development.

It further seeks to promote party loyalty and discipline and encourage and support continuing voter's education and civic literacy programs through political parties.

Among the key points of the measure is the provision of penalties for political turncoatism.

Political turncoatism refers to the change of political party affiliation by a party member one year before and one year after any national elections. Any party may legitimately change party affiliation only within the second year of a three-year term.

However, political turncoatism shall not apply if the abolition, merger, or coalition of political parties where a candidate is a registered member thereof; and expulsion of the elected official in writing from one's political party, provided that the cause for such does not constitute political opportunism.

Political turncoats shall be penalized with forfeiture of their elective office, if they change their political party affiliation one year before and one year after any national elections.

They shall also be disqualified from running for any elective position in the next succeeding election immediately following the act of changing political party affiliation.

Moreover, political turncoats shall be prohibited from being appointed or from holding any position in any public or government office for three years after the expiration of the current term or office. They shall also be prohibited from assuming any executive or administrative position in the new political party.

Lastly, they shall be mandated to refund any and all amounts received from one's political party, plus a 25 percent surcharge thereon.

Speaker Arroyo earlier stated that her HB 697 aims to give importance to party ideals and policy agenda rather than political pragmatism and survival.

Her bill proposes that any member of the party wanting to change party affiliation after being elected on the party’s ticket, should first resign from his elective position and seek a fresh mandate from the electorate.

Likewise, defecting persons cannot be appointed nor hold any position in any public office until after the expiration of the term within which they were elected.

“Our history tells us that political parties in the Philippines are normally used only as political vehicles to win an election. Hence, most political aspirants change political parties for convenience, rather than conviction. This only shows the lack of ideology commitment to the members of a party because they choose parties based on the rise and fall of the tide of opportunity,” said Speaker Arroyo in her explanatory note of HB 697.

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