KILLING ME SOFTLY WITH CORRUPTION
17 July 2025
You save. You plan. You sacrifice.
You skip the luxuries, avoid unnecessary debt, and put money aside for your child’s education, your health, or your retirement. For decades, that’s how Filipino families survived—with prudence, not privilege.
And now?
You’re punished for it.
Under Republic Act 12214 or the Capital Markets Efficiency Promotion Act (CMEPA), effective July 1, 2025, even long-term time deposits and peso bonds—which were previously tax-exempt if held for at least five years—are now subject to the 20% Final Withholding Tax (FWT).
Not on luxury earnings. Not on market speculation. But on savings. Slow-growing, hard-earned bank savings.
I. THIS ISN’T “FISCAL DISCIPLINE”—IT’S A BACKDOOR BURDEN
Let’s clarify: the 20% tax isn’t new. It’s been imposed on regular interest income for years.
But what has changed is that even long-term deposits—once protected by law for their prudence—are now taxed the same way as short-term or speculative income.
Imagine:
• You lock in P100,000 for five years, expecting your full interest of P6,000.
• But now, P1,200 gets deducted in taxes—even if you committed years ago under a different rule.
Banks like Security Bank and UnionBank have reportedly stated they’ve begun applying this tax even to existing LTTDs, starting July 1. For many, it feels like the rules were changed halfway through the game.
All while inflation eats away at purchasing power, and basic goods cost more every quarter.
II. SENIORS, OFWs, MIDDLE-CLASS SAVERS: YOU’RE PLUGGING THE HOLE THEY DRILLED
This tax expansion is probably meant to help plug a budget hole—one created not by the prudent public, but by:
• P17 trillion in national debt (as of May 2025),
• Runaway spending,
• Billions in confidential and discretionary funds,
• And unaddressed corruption, waste, and audit findings.
Instead of fixing leakages, the government turns to those who quietly do what’s right: SAVE.
They won’t cut the pork—but they’ll cut your interest. They won’t prosecute plunder—but they’ll tax your prudence.
III. THIS ISN’T JUST FINANCIALLY DUMB. IT’S MORALLY REGRESSIVE.
Let’s be honest: the ultra-rich don’t keep their wealth in savings accounts.
It’s the senior citizen, the OFW, the small entrepreneur, and the average worker who trust their banks. Not to hoard—but to protect what little they have.
And what’s the message now?
“If you choose safety and long-term stability—you’ll get taxed harder.”
That’s not just bad economics.
That’s cruel public policy.
IV. THERE ARE SMARTER, FAIRER ALTERNATIVES
If the state truly wants to raise revenue while preserving dignity, it should:
1. Tax luxury spending, not pensioners.
2. Cut bloated budgets—especially on confidential funds.
3. Incentivize saving—by reintroducing tiered tax relief for deposits below P1 million, or exempting senior citizens’ interest income.
Because a nation that punishes prudence is one sabotaging its own future.
V. THIS ISN’T ABOUT NUMBERS. IT’S ABOUT WHAT WE VALUE.
Finance Secretary Recto may be smiling in the photo. But many of our elders are not.
They’re worried.
They’re rethinking if saving still makes sense in a system where prudence is penalized, and plunder is protected.
We were taught that saving was good. That responsibility builds the nation.
So why are the most responsible citizens the first to pay—for the mistakes of those who aren’t?
This is no longer just a tax issue. It’s a values issue.
And it’s time we ask:
Whose side is our government really on?
•••
OPINION | BY ROB RANCES
Disclaimer: This commentary is based on the provisions of Republic Act 12214 (Capital Markets Efficiency Promotion Act) and statements from banking institutions as of July 2025. The intent is to provide public awareness and critical analysis, not legal or financial advice. Any updates to the law’s implementation should be verified through official government or banking channels.
