The news that the Philippines is in the blacklist of uncooperative tax havens, along with Uruguay, Costa Rica and Malaysia caught many people by surprise. The public has always been soothed with assurances that the financial system is well regulated and that we are an island of calm in the sea of global turmoil.

Promises, promises! Reactions to the inclusion in the blacklist came thick and fast from the Executive and the Legislature. DOF Secretary Teves and Undersecretary Gil Beltran pointed to existing laws on bank and tax information secrecy as the culprits. Tax information is considered under our laws as confidential and cannot be shared, as required by the OECD countries. DTI secretary Favila commented that “We take it as a challenge, and it is really up to us to prove them wrong.” From Malacañang, Press Secretary Cerge Remonde admitted that “it is a wake-up call.” He assured the public that the Philippines will comply with OECD requirements soon.

Excuses, excuses! In his statement, Sec. Teves hinted that the responsibility for getting out of the blacklist is that of the Legislature. He called upon both houses of Congress to review tax-related laws.

In an obvious defensive ploy, Speaker Nograles tried to turn the tables and lashed at the OECD countries who he accused of causing the global economic meltdown. Sen. Escudero, chair of the Banks, Financial Institutions and Currencies Committee blamed the Anti-Money Laundering Council for not raising the warning. He said there is a need to verify if there is a basis for the inclusion of the :Philippines and it is not just “a filler” for the OECD report. Sen. Loren Legarda wondered why Switzerland is not included in the list. She noted that the concept of bank secrecy was not invented by the Philippines.

Action, action! As far as civil society organizations like Social Watch Philippines are concerned, the matter of bank secrecy and tax information is an old, hoary issue which government has been most reluctant to touch. During the decade of the 1980’s, many countries were already going into revenue audit. Audit institutions not only audit expenditures but also determine whether the revenues are properly calculated and actually collected. As then Secretary to the Commission on Audit, I know for a fact that auditors were sent abroad for training in revenue audit, in anticipation of a policy shift to expand the coverage of audit . COA suspected that tax revenues which were due were not collected properly and that income from taxation was severely understated.

However, the policy decision to implement revenue audit was stopped by a Supreme Court decision, citing bank secrecy laws as a basis.

Nograles’ attack on OECD countries and the role of their banks in the financial crisis merely repeats a fact which is already accepted by the international community. The current concern is to correct these lapses and the Philippines is listed among those who are not cooperating.

As for Sen. Escudero’s complaint of “lack of warning,” the decision of sharing tax information was agreed upon by OECD and non-OECD countries, which includes the Philippines. It was endorsed by the G20 Finance Ministers as early as 2004 and a United Nations Committee on Tax Matters in 2008! Obviously, it is not a mere filler. Considering the propensity of the Philippines to enthusiastically attend international conferences with huge delegations in tow, this issue should not have escaped their notice.

As for verifying whether there is a basis for inclusion of the Philippines in the blacklist, it is not necessary since no less than Malacañang and DOF have already admitted that our laws are to blame and possibly need amendment.

It is true that Switzerland gained notoriety during the heyday of dictators like Ferdinand Marcos. However, they have already passed a law which requires banks to trace and refuse deposits from developing countries which are obviously beyond their means.

Social Watch Philippines actively participated in the global events which led to the Monterrey Consensus on Financing for Development (FFD) in 2001. At that time, exchange of tax information had already been agreed upon. Only last year, during the FFD meeting in Doha, civil society organizations again demanded action on tax havens. As usual, a Philippine delegation was in attendance in that conference attended by both OECD and non-OECD countries.

There is therefore no basis for the lame excuses for the government’s failure to comply with this international decision.

Bank secrecy and domestic revenue. Tax collections have always been understated because of existing bank secrecy laws. More than at any other time, the country needs more revenue. It is time that the Executive and the Legislature pause from incessant politicking and take action once and for all.