THIS refers to former Sen. Rene A.V. Saguisag?s letter titled ?Tax on investments in democracy baseless.? (Inquirer, 11/20/ 09) On behalf of the Bureau of Internal Revenue (BIR), I would like to clarify some issues he raised.

It is important to note that the 5 percent Creditable Withholding Tax (CWT), prescribed in Revenue Regulations (RR) No. 8-2009, is not a tax on the candidate, political party or contributor. Rather, this is a tax on the supplier of goods and services who will be earning income when it provides the materials and services for the campaign activities and expenses of candidates, political parties and contributors. This tax on the suppliers of goods and services is collected by means of the expanded withholding tax system where the payors (in this case, the candidate, political party and contributor), when making payments, are required to deduct a certain amount of the price and remit it to the BIR.

Being a withholding tax, it would entail no additional cost to the candidate, political party or contributor. Campaign expenditures and contributions will not increase because of the 5 percent CWT.

Sec. 57(B) of the National Internal Revenue Code provides for a system of withholding tax on items of income payable to natural or juridical persons which shall be credited against the income tax liability of the taxpayer for the taxable year. It is this provision of law that holds the legal ground for the issuance of RR No. 8-2009.

We hope, we have adequately answered the concerns of the good senator regarding this matter.

?JOEL L. TAN-TORRES,
Commissioner,
Bureau of Internal Revenue