OECD blacklist may risk RP access to cheap loans

MANILA, Philippines - The Philippines risks losing access to cheap foreign loans for its future projects after being blacklisted for its inability to comply with transparent global tax standards. This was disclosed by Department of Finance (DOF) undersecretary Gil S. Beltran over the weekend. “Loans funded by overseas development assistance (ODA) proceeds this year are already in place. But future ODA-funded programs are the ones at risk," Beltran said in a text message. Beltran also raised the possibility that if low-interest, long-term foreign loans are withheld by donor countries, the country’s macroeconomic goals may be compromised since these funds form part of Manila’s fiscal plans. The Organization for Economic Cooperation and Development (OECD) could adjust the volume of loans it alloted for the country, making it difficult for Manila — which is currently facing a revenue slowdown — to raise its own cash to complement foreign funding requirements, Beltran said. The government remains prepared to cooperate fully with the OECD although the DOF “would need to know exactly the kind of tax data they want," Beltran added. Moreover, the blacklist may also result in lower foreign direct investments (FDIs) as a result of the OECD announcement, Finance Department Secretary Margarito B. Teves said. FDIs, usually in the form of fixed assets such as factories and equipment, have already fallen 48 percent in 2008 to only $1.5 billion, data from the Bangko Sentral ng Pilipinas (BSP) showed. The Finance official was prompted to make this remark after the Philippines on Friday was identified by the OECD as an “uncooperative tax haven." Three other countries were similarly tagged in a so-called “name and shame" campaign undertaken by the OECD and the world’s richest 20 nations, or the G-20, during a summit held on Thursday in London. Uruguay, Costa Rica, the Malaysian territory of Labuan, and the Philippines were among those which failed to comply with new rules on financial transparency. These rules covered tax transactions and bank secrecy which were drafted during the 2004 Global Forum on Taxation. The matter of making the country’s tax laws comply with global standards was already up to Congress, Teves said. “In the past there were attempts to amend the bank secrecy law in Congress but they were not prepared to do so at that time. With the G20 recommendation, maybe Congress can adjust or change its mind," Teves said. Teves promised to approach Congress and propose amendments to the country’s bank secrecy and tax laws in the next few weeks. He also reiterated previous announcements that Manila will not seek new tax legislation for 2009, save for the DOF proposal to adopt a simplified and uniform excise tax rate to collect P100 billion more each year. - GMANews.TV