SOMEONE just broke a story. And I bet you, too, followed the election special of “The Jessica Soho Presidential Interview” with the four front-running candidates for the May 9 elections.
One of the takeaways that emerged from the interview is on the issue of leftover campaign funds of Mayor Isko Moreno increasing his net worth.
In 2016, Mayor Isko failed in his bid for senator. Thus, he declared to the Commission on Elections (Comelec) that he had P50.8 million unspent campaign funds. Prior to the election, his net worth based on his Statement of Assets, Liabilities, and Net worth (SALN) in 2007 was P7.5 million.
Did he violate anything?
Mayor Isko maintained that he did not violate any law by keeping the leftover campaign funds. He reasoned that as long as he pays the proper tax in accordance with what the Bureau of Internal Revenue (BIR) said, then no law is violated.
Additionally, he said that if a candidate had limited expenses during the elections and his or her donation exceeded his or her spending, then there is a need to pay taxes as part of his or her income.
What does the BIR say about this?
Based on Section 2 of Revenue Regulation No. 7-2011, the “unutilized/excess campaign funds, that is, campaign contributions net of the candidate’s campaign expenditures, shall be considered as subject to income tax, and as such, must be included in the candidate’s taxable income as stated in his/her Income Tax Return (ITR) filed for the subject taxable year.”
This is supported by Revenue Memorandum Circular No. 31-2019 which states that “unutilized/excess campaign funds, net of the candidate’s or political party’s/party list’s campaign expenditures, shall be considered as subject to income tax and as such, must be included in their/his taxable income as stated in their/his Income Tax Return (ITR). No further deduction, either itemized or optional, shall be made against the said taxable income.”
It is clear that unutilized or excess campaign funds are subject to income tax and must be included in taxable income in the candidate’s income tax return.
Failure to declare, any candidate or political party or party list group, whether winner or loser, shall be automatically precluded from claiming such expenditures as deductions from the campaign contributions making the entire amount directly subject to income tax.
Considering this kind of situation, it should be noted that there were a lot of candidates who ran in the previous elections. And maybe only a few declared all their campaign contributions or the excess.
It could also be that some ran for public office to receive funds for personal use.
The Election Law is silent on what the candidates should do with their campaign funds left after the elections. This is something that the Comelec and our lawmakers should address./PN
