Questionable BIR action could lead to shut down of Makati City Government

[Syuryuken]

The questionable decision of the Bureau of Internal Revenue (BIR) to garnish the bank accounts of the Makati city government over claims of unpaid liabilities could lead to a shutdown of the entire local government and adversely affect Makati residents who rely on city services, city officials said today.
“This is a political move against me, but it is the people of Makati who will suffer. The national government will have to answer to the people,” Makati Mayor Jejomar C. Binay said.

In a press conference, Binay and Vice Mayor Ernesto Mercado said with the BIR order freezing all the bank accounts of the city government in four government banks, the city government will not be able to disburse funds for social service projects and pay for public utilities like electricity for street lights and city offices.

The effects of the BIR action cuts across all services extended by the city, from garbage collection, road repairs, traffic management, health services, and the distribution of free school supplies for Makati public school children this June.

“In short, the national government is shutting us down,” Binay said.

Binay said the first casualty will be some 8,000 city employees who were scheduled to receive their mid-year bonuses starting Friday. “I’m sorry to announce that we will not be able to release the mid-year bonuses of our employees as scheduled. If this continues for another ten days, we might not be able to give the bonuses,” Binay said.

Binay maintained that city government entered into a settlement of P200 million with the BIR upon the request of BIR chief Jose Buñag, who was trying to meet his collection target. He said they were never told that the settlement would have to be reviewed by another body, and thus were surprised when they were informed in November 2006 that the settlement has been rejected and the P200 million would be credited to the alleged liabilities.

City officials were assured by Finance Secretary Margarito Teves in December 2006 that a meeting will be held to resolve the issue, but a notice was given on March 2 for the city to pay the amount of P332 million on or before March 31. In reply, city officials asked Buñag to convene the meeting, but the BIR issued the garnishment order on May 2.

Binay said his political opponents knew of the garnishment order and was announcing it during their rallies a few days before the order was issued.

The BIR on Wednesday issued a notice of garnishment for the amount of P1,150,331,301.81. Makati is disputing the amount, claiming that if it does have liabilities, the amount would not exceed P500 million.

They also questioned the rush to garnish the city’s assets, and asked why Revenue Director Nelson Aspe was unaware of the garnishment when he is the one supposed to issue such a notice.

The order, signed by Roberto Bacquiran, Aspe’s subordinate, directed government depository banks to freeze city accounts. The first notice of garnishment was sent to Philippine Veterans Bank, where the city government has an account of P3.2 billion.

Binay said the city’s account in Veterans Bank alone is more than enough to pay for the alleged liabilities.

“If, for the sake of argument, we owe BIR the P1.1 billion they are claiming, is the PVB account not more than enough to cover the deficit? “What other reason does Bacquiran have for freezing all our bank accounts and including private banks? For us, this is a clear act of political harassment,” he said.

There are only four banks authorized by the Bangko Sentral ng Pilipinas to hold deposits of local government units: Land Bank of the Philippines, Development Bank of the Philippines, Veterans Bank of the Philippines, and Philippine National Bank.

Yesterday, Bacquiran moved to expand the garnishment order, issuing a notice to all private banks as well.

Binay questioned the inclusion of Mercado in the notice of garnishment. He said BIR guidelines limit the liability to only the City Mayor and the City Treasurer. “But they are still going after the private bank accounts of Vice Mayor Ernesto Mercado,” he said.

He also said the move was irregular in the light of a BIR memorandum extending the abatement program to June 30 2007. BIR Revenue Memorandum Circular No. 7-2007 dated January 31, 2007, extended to June 30, 2007 the deadline for all taxpayers to avail themselves of the amnesty being offered by the BIR.

“There was no reason but politics. The garnishment order was released in the closing days of the campaign, and on the same day our political opponents filed disqualification cases against me and my daughter, Abigail,” he said.



Pulitika nga naman.....

[mazdamazda]

P1.1 billion in unremitted withholding tax...

Sobrang tagal na ng issue na ito... ayaw na lang i-settle nila Binay yung partial obligation nung last March 31. Paawa effect pa.

[BlueBimmer]

HOY magbayad ka binay!!!!

[_Qwerty_]

ang tanong san napunta yang tax na yan?? kung nasa makati pa.. eh bakit hindi na lang bayaran agad?? masama nyan.. wala na yung pera!

[mazdamazda]

in fairness... medyo liquid naman ang Makati... may multi-billion peso account sila sa isang bank AFAIK.

[_Qwerty_]

yun naman pala.. ehh di i settle na nya yang utang nila sa BIR.. tapos ang storya.. hindi yang ginagamit pa nya sa politika yang sitwasyon..